Global stock markets came under heavy pressure on Friday as mounting doubts over the artificial intelligence boom triggered a sharp selloff in technology shares. Nearly $2.5 trillion in US market value was wiped out in a single session, while Asian markets opened with steep losses.
South Korea's benchmark Kospi plunged nearly 9 per cent at the opening, prompting the exchange to halt trading for 20 minutes through circuit breakers. Japan's Nikkei 225 dropped more than 6 per cent, entering bear market territory after falling over 20 per cent from its recent peak.
The panic followed a bruising session on Wall Street on Thursday. The Nasdaq Composite fell 5.52 per cent, its steepest single-day decline since April 2025, and entered correction territory after closing more than 10 per cent below its October 6 record. The S&P 500 and Dow Jones Industrial Average also recorded their biggest daily falls since that period.
Political uncertainty adds to AI investment concerns
Investors are increasingly questioning whether the enormous spending on AI infrastructure will generate returns to justify the investment. Concerns have also emerged over the possibility that political opposition could slow data centre construction in the US.
The Democratic victory in Texas' gubernatorial election has drawn attention to the future of data centre projects in the state. Governor-elect Gina Hinojosa had campaigned for a temporary pause on new data centre construction and the removal of certain tax incentives for companies setting up such facilities.
Texas has attracted major investments from Google, Meta, Oracle and OpenAI. Any restrictions could affect companies involved in supplying chips, servers and other infrastructure required to run AI systems.
Nvidia, chipmakers and AI infrastructure stocks tumble
The selloff hit semiconductor manufacturers and businesses supplying computing infrastructure particularly hard. Nvidia shares fell 9.3 per cent, wiping out their gains for 2026. A closely watched semiconductor index dropped 12.3 per cent, its worst session in around six-and-a-half years.
The Nasdaq 100 declined 6.36 per cent, while Tesla and SpaceX shares fell 11 per cent and 9 per cent, respectively. AI cloud infrastructure providers CoreWeave and Nebius also suffered losses of around 10 per cent and 15 per cent.
Weak earnings added to the pressure. Qualcomm shares dropped 9.5 per cent after missing market estimates and warning that higher memory chip costs were hurting sales.
Market fear gauge jumps as investors seek safety
The CBOE Volatility Index (VIX), widely known as Wall Street's fear gauge, surged around 70 per cent, recording its biggest one-day rise in nearly two years. All 11 sectors of the S&P 500 ended Thursday's session lower.
Investors also moved towards US government bonds, pushing the yield on the 10-year Treasury note down to 4.84 per cent, its lowest level in two months.
Fears of AI infrastructure overcapacity grow
The latest correction reflects a broader debate over whether technology companies are building data centre capacity faster than future demand can support. Concerns over electricity consumption, water requirements and possible overcapacity have added to questions about the sustainability of AI spending.
What began as enthusiasm over the growth potential of artificial intelligence is now facing closer scrutiny over costs, profitability and the returns companies can deliver.