AI Stock Selloff Triggers Global Market Volatility

A sharp selloff in technology stocks has triggered increased volatility and credit risks across global financial markets as investor confidence in the artificial intelligence boom weakens. The Nasdaq 100 plunged more than 6 percent on November 5 before recovering nearly 2 percent on November 6, while the VIX volatility index climbed above 28, its highest level since March.

Market anxiety is most acute in credit markets. Five-year credit default swap spreads for AI cloud computing company CoreWeave reached record highs, exceeding 1,000 basis points. Spreads for Intel and SpaceX also rose. Analysts note that a disappointing performance from SoftBank Group has increased market sensitivity toward other AI-associated firms, particularly CoreWeave ahead of its upcoming results.

Despite the turmoil, broader financial markets remain relatively stable. Government bond markets have avoided severe disruption, and cash funds attracted $140 billion in the week ending November 4, signaling a shift toward safer assets. While short-term volatility is expected to persist in the U.S. core AI trade, some analysts view the current environment as a bullish opportunity for long-term investors, citing positive global growth and earnings.

Additional risks remain tied to geopolitical tensions in the Middle East and the actions of the U.S. administration, which could trigger spikes in oil prices if escalations occur.