Key Takeaways:
Global technology stocks lost more than $2 trillion in market value Tuesday as a selloff that began on Wall Street swept across Asian and European markets, with losses concentrated in semiconductor and AI-related names.
The Nasdaq 100 futures slid more than 2% in premarket trading Tuesday, extending a rout that erased over $650 billion from SpaceX alone and sent South Korea's Kospi down 9.99%. The decline marks the sharpest pullback for technology stocks since the start of the year, driven by growing unease over the cost of artificial intelligence infrastructure and the prospect of higher interest rates.
"The selloff reflects growing unease about how much capital is being consumed by AI infrastructure buildout, and whether the returns will materialize on the timeline investors expect," said Gary Black, managing partner at The Future Fund. "When a company like SpaceX trades at 150 times projected 2026 EBITDA, the math doesn't math."
The rout swept across every major market. South Korea's Kospi plunged 9.99% to 8,203.84, triggering a 20-minute trading halt for the fourth time this year as foreign investors dumped semiconductor shares. Japan's Nikkei 225 fell 3.3%, while Hong Kong's Hang Seng Index dropped 1.9%. In Europe, the Stoxx 600 declined 1.2%, with Germany's Dax losing 1.5% and France's CAC 40 falling 1.06%. The UK's FTSE 100 slipped 0.9% to 10,343.
The selloff raises the stakes for the U.S. Flash June PMI report due at 9:45 a.m. ET, which will test whether easing inflation pressures can arrest the decline. The S&P 500's 50-day moving average sits at 7,328.60 and the Nasdaq Composite's at 25,619.20 — levels that, if breached, could accelerate selling into a broader correction.
SpaceX Bond Sale Triggers Reassessment
The catalyst for the latest leg lower was SpaceX's disclosure that it plans to borrow up to $20 billion through a bond sale, reviving concerns that even the most richly valued technology companies are burning cash faster than anticipated. SpaceX shares tumbled 16.4% on Monday and fell another 3% in premarket trading Tuesday, paring the stock's post-IPO gains to less than 15%. Susquehanna initiated coverage of SpaceX with a Neutral rating and a $170 price target, citing both the company's strong growth prospects and its demanding valuation.
The selloff extended beyond SpaceX to the broader technology complex. Nvidia, Alphabet and Oracle all traded sharply lower in premarket, following steep losses Monday. The retreat marks a reversal of the artificial-intelligence rally that had driven the Nasdaq Composite up more than 20% quarter-to-date before this week's decline. Investors are questioning whether the massive capital expenditure required for AI infrastructure — Morgan Stanley estimates global AI-related borrowing will surpass half a trillion dollars this year — can generate sufficient returns, especially with the Federal Reserve expected to deliver two rate hikes between now and the first quarter of 2027.
Cross-Asset Ripples
The equity rout spilled into other asset classes. Brent crude fell 1.4% to $76.83 a barrel after the U.S. waived sanctions on Iranian crude sales for 60 days, signaling progress in peace talks between Washington and Tehran. The South Korean won weakened against the dollar as foreign investors exited local equities. European natural gas storage levels dropped to 41% of capacity, seven percentage points below the level recorded during the 2022 energy crisis, though Britain's grid operator played down blackout risks for the coming winter.
In the UK, a flash services PMI reading of 48.7 — the joint sharpest contraction since early 2021 — added to the downbeat mood, though grocery inflation slowed to 3% and a heatwave boosted retail sales. The data underscore the challenge facing the next British prime minister as the economy contracts for a second consecutive month.
This article is for informational purposes only and does not constitute investment advice.
