Global markets slide as investors retreat from AI-driven stocks

Tuesday 16 December 2025 - 17:50

By: Dakir Madiha

Global markets slide as investors retreat from AI-driven stocks

Global markets faced renewed turbulence as a sharp selloff in artificial intelligence-related stocks deepened, erasing billions in market value and triggering a broader rotation away from the technology sector. The downturn, marked by steep losses across Wall Street and major Asian exchanges, underscored growing unease over whether sky-high AI valuations can sustain the pace of investment pouring into the sector.

The Nasdaq Composite fell for a third consecutive session, losing more than 2.5% over three days, while the Nikkei 225 in Japan slid 1.6% and Hong Kong’s Hang Seng Index dropped 1.5%, entering correction territory. The South Korean Kospi also retreated by 2.2%, extending a regional downturn fueled by waning investor confidence.

Earnings reports from Oracle and Broadcom intensified the exodus. Oracle’s warning that its capital expenditures for 2026 would exceed forecasts by $15 billion sent its shares plunging by nearly 11%, compounding a 46% drop since September. Broadcom, despite posting stronger-than-expected revenue, fell 11% as concerns mounted over thinning profit margins tied to custom AI chip production. Both companies’ struggles rippled through the broader semiconductor sector, dragging down Nvidia and Micron shares.

The selloff has been labeled the “Great Rotation,” as investors pivot from speculative tech names toward sectors offering greater stability. Gains in financials, healthcare, and industrials have helped offset technology losses, with the equal-weight S&P 500 index outperforming its market-cap-heavy counterpart and achieving record levels earlier this month.

Analysts point to a growing disconnect between AI’s ambitious investment levels estimated to surpass $400 billion this year and the technology’s ability to deliver proportional returns. Many institutional investors are now refocusing on sustainable earnings and balance sheet resilience rather than growth driven solely by AI potential.