AI Bubble Fears Hit Tech Stocks as Global Markets Brace for Oil Geopolitical Turmoil

AI Bubble Fears Hit Tech Stocks as Global Markets Brace for Oil Geopolitical Turmoil​

Early trading across global markets reflected significant caution, driven by fears surrounding the sustainable growth of the Artificial Intelligence (AI) boom. Technology stocks gave back substantial portions of their recent gains, while rising geopolitical tensions propelled a sharp surge in oil prices.

US Pre-Market Turbulence as AI Correction Hits Chip Stocks​

US futures showed mixed signals as investors questioned the profitability behind the massive capital expenditure currently pouring into AI infrastructure. Futures for the S&p 500 lost 0.2 per cent, while Dow Jones Industrial Average futures ticked up 0.3 per cent, though Nasdaq futures fell 1 per cent.

The correction was particularly stark among semiconductor and memory stocks that had driven Monday's gains higher. Broadcom, which rose 3.7 per cent on Monday, shed considerable ground overnight, slipping 2.8 per cent before the opening bell. Micron, Marvell Technology, and Intel were all showing declines between 4 per cent and 6 per cent in early trading.

Western Digital, a data storage company that has tripled its stock value this year amid the AI wave, saw its shares drop 7 per cent premarket. Meanwhile, SpaceX, which owns xAI, fell less than 1 per cent ahead of its debut on the Nasdaq 100 index.

Global Equities See Mixed Performance Across Continents​

In Europe, trading was varied: Germany's DAX shed 0.6 per cent, but the CAC 40 in Paris and Britain's FTSE 100 managed modest gains of 0.3 per cent, respectively. The volatility seen earlier highlights the lack of uniform strength across major industrial indices.

Asian markets generally retreated. South Korea’s Kospi closed 4.9 per cent lower at 7,656.31 after hitting a low of 8 per cent intraday. Tokyo’s Nikkei 225 declined 2.1 per cent to 68,256.96, with chipmaker Kioxia Holdings falling sharply by 11.3 per cent.

The rest of Asia also saw dips. The Hang Seng in Hong Kong dropped 0.5 per cent to 23,496.98, and the Shanghai Composite index gave up 1.3 per cent to 3,990.24. Taiwan's Taiex lost 2.3 per cent. In Australia, the S&p/ASX 200 fell 0.3 per cent to 8,803.90, while India’s Sensex shed a minor 0.1 per cent.

Geopolitical Strain Drives Spike in Crude Oil Prices​

Oil markets reacted sharply to mounting instability in the Middle East. The price of Brent crude rose by 69 cents to $72.68 a barrel, mirroring concern over supply stability. This spike puts oil prices close to levels seen before late February tensions between the United States and Israel and Iran.

The increase is tied to reports of ongoing threats to maritime trade routes in the Persian Gulf. A tanker travelling off the coast of Oman in the Strait of Hormuz caught fire early Tuesday after being struck by a projectile, confirmed the British military.

Iranian state television reported that the liquefied natural gas tanker came under attack after allegedly ignoring warnings, though it did not directly claim responsibility for the assault. Meanwhile, US benchmark crude added 56 cents to $69.11 a barrel amid this elevated risk environment.