AI Stock Sell-Off Triggers Global Market Rotation
Global equity markets experienced a sharp sell-off in AI-focused technology stocks driven by inflation concerns and warnings over mounting data center debt.
Global financial markets faced a significant downturn during the third week of October 2026, as investors questioned the valuations and returns of the artificial intelligence boom. The sell-off was triggered by a hot inflation report and warnings from Goldman Sachs Private Wealth Management regarding the accumulation of debt behind data center build-outs, specifically highlighting CoreWeave's $50 billion debt as a catalyst for concern.
In the United States, AI software companies lost approximately $260 billion in value. Supermicro became the worst performer in the S&P 500 with a 23% loss, while Astera Labs saw its stock drop between 15% and 16.5% despite holding $1.25 billion in cash. The volatility extended to Asian markets on October 23, where technology firms like SoftBank, Murata, and TDK fell 6% to 7%. Financial institutions in Japan and South Korea, including Sumitomo Mitsui Financial Group, Hana, and Woori, also reported sharp losses due to their high leverage and exposure to the AI trade.
Markets showed signs of stabilization by midday on October 23 as investors rotated capital away from tech equities. This shift drove the Consumer Staples Index to a record high and sparked a haven bid for U.S. Treasuries, which lowered yields and weakened the U.S. dollar. While defensive sectors like tobacco and fast food gained, the Chinese market remained fragile with the CSI 300 continuing in a bear market.
