US TECH STOCKS FALL AMID AI VALUATION CONCERNS

Major American stock indices declined on Tuesday as investors reassessed valuations in the technology sector. The Nasdaq opened 2% lower, whilst the Dow Jones Industrial Average and S&P 500 also fell at the start of trading. The sell-off followed a significant drop in Alphabet's share price on Monday, when the Google parent company experienced its worst market day in over a year, with shares falling 5% by close of trading. Alphabet's decline came after two high-profile artificial intelligence researchers departed the company.

The three major indices have risen substantially in 2025, driven by investment in AI technology and infrastructure. The Nasdaq has gained 10% year-to-date, the Dow has increased 6% and breached 51,000 points, and the S&P 500 has climbed 7.3%. However, economists have warned that the scale of spending on AI infrastructure resembles the dot-com bubble of the early 2000s. Seven technology companies currently constitute 30% of the S&P 500's total value, creating concentration risk amongst investors. The Federal Reserve signalled last week that it may raise interest rates to address inflation, increasing borrowing costs for highly leveraged technology companies.

SpaceX, the aerospace company owned by Elon Musk, declined 16% on Monday following its market debut on 12 June. The sharp fall suggested the post-IPO momentum had begun to diminish. Investors across global markets have begun questioning whether rapid acceleration in the technology sector reflects sustainable business growth or unsustainable valuation expansion. The sell-off extended beyond US markets into Asia, reflecting worldwide concern about technology sector fundamentals.