Tech selloff deepens as AI valuation doubts spread

A global selloff in technology shares intensified Tuesday, dragging down major U.S., Asian and European indexes as investors questioned whether the artificial intelligence boom can deliver profits large enough to justify soaring valuations.

The pressure hit many of the companies that have powered this year’s market rally. Shortly after Wall Street opened, the tech-heavy Nasdaq Composite fell as much as 628 points, or 2.4%, to 25,537, according to CBS News. NBC News reported the Nasdaq Composite was down 1.1% shortly after the opening bell, while the Nasdaq 100 fell 2%. The S&P 500 declined between 1.3% and 1.6% in early trading, while the Dow Jones Industrial Average was mixed across reports, with CBS reporting a 305-point, or 0.6%, decline and NBC reporting a slight gain held back by weakness in Caterpillar, Nvidia and Cisco.

The selloff followed a 1.3% drop in the Nasdaq on Monday and reflected growing skepticism about AI-related spending. For months, investors have bid up technology stocks on expectations that companies spending billions on AI infrastructure would turn those investments into faster revenue growth and higher profits. Now they are asking for proof.

“For a long time, the market treated AI spending as unquestionably positive,” Nigel Green, CEO of financial consultancy deVere Group, said in an email Tuesday. “Investors are now becoming more demanding. They want evidence that unprecedented spending will translate into unprecedented profits.”

SpaceX remained a focus of market anxiety after several days of steep losses following its June 12 U.S. market debut. CBS News reported that SpaceX shares fell $4.09, or 2.7%, to $150.51 after plunging 16% Monday, and said the stock has dropped for four straight trading days as investors question whether the company can justify a valuation of more than $2 trillion. NBC News reported shares fell as low as $147 before turning higher in volatile trading.

NBC News, citing Bloomberg, reported that SpaceX’s decline has erased more than $900 billion in value from its peak above $225 a share one week ago. On Monday alone, the stock fell nearly 17%, wiping out $400 billion in value, the second-largest one-day loss for any stock on record, Bloomberg reported. Selling accelerated after SpaceX announced an “inaugural bond offering,” which Bloomberg said could raise about $20 billion, on top of the $85 billion raised through its IPO two weeks ago.

Chip and memory stocks were hit especially hard. Nvidia fell about 3% to 3.4% in early trading, while Broadcom dropped 2.4%, according to CBS News. NBC News reported shares of Sandisk, Micron Technology, Western Digital, Marvell and Qualcomm each fell around 9%, with Micron down 10% ahead of its Wednesday earnings report.

“In this market we will continue to go through a number of ‘gut check moments’ in the tech trade as the AI Revolution remains in the 3rd inning,” Dan Ives, head of tech research at Wedbush Securities, wrote in a note. “This morning is just another one of those moments.”

The selling spread overseas. South Korea’s Kospi closed down 10%, with Samsung and SK Hynix each sliding more than 12%, NBC reported. In Europe, the Stoxx 600 lost nearly 1% and Germany’s DAX fell 1.1%, with semiconductor maker Infineon down more than 6%.

Inflation and interest-rate worries added to the pressure. CBS News reported that the Federal Reserve last week opened the door to higher borrowing costs in 2026 as it tries to contain inflation driven by rising oil prices tied to the Iran war. Economists expect a U.S. consumer inflation measure due Thursday to rise to 4.1% in May from 3.8% in April, and traders see a nearly 90% chance of at least one Fed rate increase by year-end, according to CME Group data cited by CBS.

Oil prices dipped slightly Tuesday, NBC reported, as traders assessed efforts to end the U.S.-Iran war and restore traffic through the Strait of Hormuz. Société Générale said a tentative truce had eased immediate supply concerns but warned that a rapid return to normal flows through the strait was unlikely.