Stock markets fall as concerns persist over tech firms at heart of AI boom

• The Nasdaq lost nearly 5% last week, ending nine weeks of gains, as investors questioned whether AI investments made at high costs could become obsolete and demanded clearer proof of earnings and return on capital expenditures
• Major chipmakers led the decline, with Samsung, SK Hynix, ASML, and Besi all falling sharply; Japan's Nikkei dropped 3% and Hong Kong's Hang Seng fell 1.5%
• Rising oil prices and fears of higher inflation are increasing expectations that the Federal Reserve may raise interest rates this year, pressuring tech firms seeking fresh funding for AI infrastructure

Market Summary: Global Stock Selloff Amid AI Concerns and Geopolitical Tensions

Key Market Movements:

Global stock markets declined sharply on Monday following last week's tech selloff. The Nasdaq lost nearly 5% while the S&P 500 dropped 2%, ending a nine-week winning streak. Asian markets were hardest hit, with South Korea's Kospi plunging almost 9%, triggering a brief trading suspension. Japan's Nikkei 225 fell 3%, and Hong Kong's Hang Seng declined 1.5%. European markets also dropped, with the pan-European Stoxx 600 down 0.9%.

Sector Focus:

Technology and semiconductor companies led the decline. Major fallers included Samsung Electronics, SK Hynix, ASML (-3.2%), Besi (-4.5%), Aixtron (-6%), and Nokia (-5%). In London, the FTSE 100 opened down 0.4%, with Rolls-Royce and IAG among the biggest losers.

Primary Concerns:

Investors are growing skeptical about AI companies' ability to fund "eye-watering" spending plans amid concerns about asset obsolescence and unclear monetization paths. Markets are now pricing in higher probability of Federal Reserve rate increases this year, compounding funding challenges for tech firms requiring fresh capital.

Oil Market Impact:

Brent crude surged nearly 5% to $97.60 per barrel following direct military exchanges between Iran and Israel after strikes in Beirut. Concerns center on potential closure of the Strait of Hormuz, through which 20% of global oil and gas supply flows.

Market Outlook:

Analysts suggest this represents a "positioning reset" rather than fundamental shift, with investors demanding clearer proof of AI earnings delivery and capital discipline. The sentiment indicates "easy AI enthusiasm may be" ending as markets become more selective.