Global stock markets shuddered on Tuesday, dragged down by tech companies, as investors suggested that enthusiasm for artificial intelligence companies may be approaching its limits.
The firms at the forefront of A.I. and chip-making have an outsize impact on market benchmarks, after a long — if sometimes volatile — rally pushed indexes to record highs. A sell-off in these shares that started in the United States on Monday reverberated around the world, shifting investors’ focus away from the war in Iran, oil prices, interest rates and other concerns that have influenced the market of late.
Some of the biggest American tech companies, including Alphabet and Amazon, continued to fall when trading resumed on Tuesday, on top of losses the day before. The stock of SpaceX also continued to lag: After jumping in its first few days of trading, Elon Musk’s rocket and A.I. company has shed more than 20 percent of its value in the past three trading sessions, erasing more than $600 billion in market value. But it remains above its initial public offering price.
The S&P 500 was down roughly 1.5 percent at the start of the trading day in the United States on Tuesday, extending the global rout. The tech-heavy Nasdaq was down 2.2 percent.
“If today’s price action points to A.I. exhaustion, fears will grow concerning the global economy’s ability to generate a clear and diversified growth narrative amid tighter funding and fiscal constraints,” Geoffrey Yu, a strategist at BNY in London, noted.
The most eye-catching decline on Tuesday took place in South Korea, the world’s best-performing stock market since the start of 2025. The country’s benchmark Kospi index fell 10.5 percent, at one point setting off a 20-minute trading halt by the exchange operator.
The surge in South Korea’s stock market over the past year was mainly fueled by the country’s two largest memory chip makers — Samsung Electronics and SK Hynix — whose semiconductors are critical to A.I. systems. As their shares have skyrocketed, retail investors have piled into the market, driving large and unpredictable swings in the market.
Shares of both tech giants plunged more than 12 percent on Tuesday. That put a small dent in a remarkable run, with both stocks more than doubling this year.
Alexander Redman, chief equity strategist at the brokerage CLSA, said that in the past, such a big one-day drop would cause panic, but now it’s treated as a regular feature of the market.
“It’s unnerving that you’re seeing this kind of volatility,” he told reporters at the company’s investor conference in Seoul. “It just feels very, very frothy.”
He added that it was hard to say whether this meant South Korean shares would bounce back soon or if it was “the beginning of the end.”
In Japan, stocks fell 3.6 percent, while markets in Taiwan and Hong Kong were down more than 1 percent.
In Europe, the Stoxx 600, an index that tracks the region’s largest companies, fell nearly 1 percent. Semiconductor companies, including STMicroelectronics of Switzerland, Infineon of Germany and ASML of the Netherlands, posted sharp declines.
The heady valuations for A.I. stocks has prompted many analysts to revisit the boom-and-bust cycle in tech stocks in the late 1990s. The death on Monday of Alan Greenspan, who coined the term “irrational exuberance” to describe the dot-com boom when he was chairman of the Federal Reserve, also revived memories of that time.
“Despite an acceleration in the investment boom, strong profit growth has mostly prevented 1990s-style imbalances from emerging,” Dominic Wilson and Vickie Chang of Goldman Sachs wrote in a recent research report. But outside of A.I.-related areas, the overall economy “looks much less robust than in the 1990s,” they noted. That amplifies the effects of macroeconomic shocks and makes markets especially vulnerable to “any challenges to the optimistic A.I. macro story,” the analysts added.
The biggest recent shock to the global economy, the rise in oil prices after the outbreak of war in Iran, continued to moderate on Tuesday. The price of Brent crude, the global benchmark for oil, slipped slightly to $77 a barrel. Although still higher from prewar levels, the price of oil has fallen for several weeks, reducing the squeeze on household and business budgets.
U.S. gasoline prices were flat on Tuesday, at a national average of $3.93 a gallon, according to the AAA motor club. That said, the cost for drivers has increased 32 percent since the war began.
The Trump administration temporarily lifted oil sanctions against Iran on Monday, a U.S. policy reversal that could help ease the flow of oil around the world. On Tuesday, conflicting accounts emerged over whether Iran had agreed to open its damaged nuclear facilities to inspectors as part of negotiations. And the latest data showed an increase in shipping traffic through the Strait of Hormuz, the vital waterway for oil and gas supplies from the Persian Gulf.
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