Nasdaq 100 drops 2% as AI selloff spreads across global markets

The Nasdaq 100 tumbled 2% and the S&P 500 fell 0.5% as AI-related stocks sold off after Samsung Electronics' blowout earnings failed to meet elevated expectations.

"The market is punishing companies for being merely great instead of extraordinary," said Michael Wilson, chief equity strategist at Morgan Stanley. "Samsung's 19-fold profit surge should have been a catalyst, but valuations had run too far ahead."

The S&P 500 fell 33.58 points to 7,503.85, while the Nasdaq composite sank 302.47 points to 25,818.69. The Dow Jones Industrial Average dropped 130 points, or 0.2%, to 52,925.15. Technology and semiconductor stocks led the decline, with Advanced Micro Devices losing 6.5%, Intel dropping 9.7% and Micron Technology falling 4.7%. SpaceX, in its first trading day after joining the Nasdaq 100, declined 6.8%. The yield on the 10-year Treasury rose six basis points to 4.54%, while Brent crude climbed 3% to $74.16 a barrel after a tanker was struck in the Strait of Hormuz.

The selloff erased roughly $400 billion in market value from the tech-heavy Nasdaq 100 alone, raising questions about whether AI-driven valuations have peaked. The next test comes later this week when SK Hynix prices its $28 billion US listing, which would rank among the largest offerings in American history.

The selloff extended across Asia and Europe. South Korea's Kospi tumbled 4.9% as Samsung Electronics alone makes up more than a quarter of the index. Japan's Nikkei 225 fell 2.1%, and Germany's DAX lost 1.4%. The dollar weakened to 161.73 yen from 162.09 yen.

Samsung Electronics said its operating profit surged roughly 1,800% from a year earlier, while revenue more than doubled. Analysts called the numbers surprisingly good, but the stock had already more than doubled this year, leaving little room for upside surprise.

The selloff in AI hardware names also dragged down industrial stocks tied to data center construction. Caterpillar fell 5.8% and Honeywell International dropped 8.5%, erasing a combined 355 points from the Dow.

Outside of technology, Rivian Automotive dropped 18.1% after the electric vehicle company said it is selling 75 million shares, diluting existing shareholders. Vertex Pharmaceuticals slipped 1.4% after agreeing to buy Crinetics Pharmaceuticals for $85 per share in cash. Crinetics soared 98.7%.

The geopolitical backdrop added pressure. Three tankers were struck in the Strait of Hormuz, and the United States revoked a license authorizing Iranian oil sales. Higher oil prices pushed Treasury yields higher, with the 10-year yield climbing to 4.54% from 4.48% late Monday.

This article is for informational purposes only and does not constitute investment advice.