The relentless three-month climb that had carried technology stocks to dizzying heights came to an abrupt halt on Tuesday, as a sudden wave of selling sent the Nasdaq index tumbling by about 3% and reignited fears that the AI boom had run ahead of itself.
The sell-off did not stop there. The newly public SpaceX, Elon Musk’s Texas-based aerospace firm, saw its shares plunge below the $150 (£114) initial floatation price before staging a modest recovery to close at $156. The choppy session underscored how vulnerable recently listed companies are when broader tech sentiment turns sour.
“Nasdaq falls 3% as AI-fueled tech rally stalls, with chipmakers hardest hit and SpaceX stock volatile.”
For months, international stock exchanges have climbed on pure optimism, pushing indices to unprecedented highs. But the sustained 90-day rally left prices looking incredibly inflated, and on Tuesday the upward drive vanished as market watchers questioned whether actual corporate adoption of artificial intelligence can truly justify such expensive valuations.
The downturn hit semiconductor players hardest. Nvidia and Intel were among those suffering the heaviest losses, dragging down a primary index of global chip firms. The wider tech sector had more than doubled stock prices from cyclical lows in 2022, suggesting investors may have moved far too quickly to fund the hardware behind the AI shift.
The anxious mood quickly spread to other high-profile assets. SpaceX, which went public on 12 June, endured a highly volatile trading session, dropping past its widely watched $150 opening price early in the day before rebounding slightly. Some optimistic traders interpreted the quick bounce as a sign of steady underlying interest in the commercial space sector. Sceptics, however, argued that such massive price swings only expose the highly speculative nature of today’s market.
Market analysts are now split on whether this sell-off is a healthy, temporary pause or the start of a much larger retreat for tech investments. The more optimistic camp suggests that profit-taking is a standard reaction following a historic run. Bank of America’s Vivek Arya supported this perspective, arguing in a note to clients that the combination of sticky inflation and strengthening demand will ultimately drive sector forecasts higher. According to Arya, the industry is simply transitioning from a phase where it had to defend its initial return on investment to one focused on solving physical-world problems.