Anxiety Over AI Spending Returns to Global Markets

Asian equities tumble after a brief rally sparked by Nvidia’s earnings surge

Asian stock markets experienced a sharp reversal on Tuesday, wiping out gains that had been fueled by Nvidia’s impressive quarterly results. The rally, which initially lifted regional indices, gave way to a broad sell‑off as investors grew increasingly wary of a potential artificial‑intelligence bubble.

After Nvidia reported revenue that far exceeded expectations, technology‑heavy indices across Japan, South Korea, and Hong Kong surged, buoyed by optimism that AI‑related spending would sustain high growth rates. However, the euphoria was short‑lived. Analysts warned that the sector’s rapid valuation expansion could be unsustainable, prompting a wave of profit‑taking and defensive positioning.

By mid‑session, the benchmark Nikkei 225 had slipped more than 2%, while the KOSPI and the Hang Seng Index each fell around 1.8%. The sell‑off was not limited to tech stocks; broader market sentiment turned cautious, dragging down financials, consumer goods, and even commodity‑linked shares.

Market commentators attribute the volatility to a “fear of an AI bubble” that is now spreading beyond the United States. “Investors are questioning whether the current wave of AI spending can translate into long‑term earnings,” said a senior strategist at a leading Asian brokerage. “The rapid price appreciation in AI‑centric equities has raised red flags about over‑optimism.”

Globally, the anxiety is reverberating through European and North American markets as well. Futures for the S&P 500 and the Euro Stoxx 50 dipped in early trading, reflecting concerns that the AI hype may be inflating valuations beyond realistic fundamentals.

While Nvidia’s earnings remain a testament to the transformative potential of AI, the recent market pullback serves as a reminder that investors are closely watching the balance between hype and sustainable growth. The coming weeks are likely to see heightened scrutiny of AI‑related capital allocations and a possible recalibration of risk across all asset classes.