AI Rout Wipes 4.6% From Nasdaq as Tech Selloff Tests the Boom's Foundations

The artificial intelligence trade took a bruising overnight, with the Nasdaq Composite shedding 4.60 per cent to close at 25,298, its steepest single-session fall in months. The broader S&P 500 dropped 1.95 per cent to 7,354, but the divergence between the two indices told the real story: investors were not fleeing equities broadly, they were fleeing the AI premium that has been embedded in the valuations of the world's largest technology companies since the generative-AI frenzy began in earnest. Gold's simultaneous surge of 1.70 per cent to US$4,058 per ounce underscored the rotation, as capital sought ballast rather than growth.

For Santiago readers, the session carries direct implications. Chilean AFP funds, which allocate a meaningful portion of their growth-oriented portfolios to global equities, have ridden the AI wave upward through passive and active exposure to US technology giants. A correction of this magnitude does not reverse years of gains overnight, but it does compress the buffer that pension savers in Fondos A and B had accumulated from the rally. Fund administrators will be watching whether the selling is a violent repricing of stretched multiples or the beginning of a broader derating of the sector.

What Changed Overnight

The catalyst, as is often the case with momentum-driven selloffs, was less a single dramatic event than an accumulation of doubt. Concerns that the capital expenditure required to sustain AI infrastructure, from data centres to semiconductors, may not translate into commensurate near-term revenue have been circulating for months. The market appears to have reached a tipping point in confidence. British American Tobacco's announced cut of 9,000 jobs, while unrelated to technology, added to a broader sense that corporate cost discipline is tightening globally, a poor backdrop for companies justifying enormous forward multiples on the promise of future productivity gains.

The rotation was not indiscriminate. Bitcoin edged higher, rising 0.60 per cent to US$60,081, suggesting some appetite for speculative assets remained, while WTI crude slipped modestly to US$70.06 per barrel, keeping energy-cost pressures contained. The euro dipped marginally against the dollar, with EUR/USD at 1.1408, leaving the US dollar broadly steady rather than aggressively bid, which argues against a full risk-off panic.

For Chilean investors, the local dimension is worth noting. The IPSA has limited direct exposure to pure-play AI names, but the technology and telecommunications components of the index are not immune to sentiment shifts that reprice global tech broadly. More acutely, the copper price, the economy's most important single variable, faces a complex read: AI infrastructure buildout remains one of the strongest structural demand arguments for copper over the medium term, meaning a prolonged AI slowdown would carry consequences well beyond share portfolios and into Chilean export revenues.

The prudent read, from Santiago to Sydney, is that the AI boom is not over but its first, speculative phase, when almost any association with artificial intelligence conferred a valuation premium, may be drawing to a close. What replaces it is a harder, more earnings-focused scrutiny of who actually profits from the technology. That transition is rarely painless, and Monday's session was a reminder of the cost of holding conviction at the wrong price.

This article was compiled by AI from the sources linked above and screened before publishing. See our editorial standards.