Nvidia shares dropped 5.0 percent, closing at $196.51, leading a broader decline in U.S. technology stocks as the Nasdaq fell 0.2 percent to 24,932. Investor concern over AI company valuations drove the move. The Russell 2000 gained 0.6 percent to 2,948, signaling rotation out of large-cap tech. The negative sentiment spread quickly, triggering a broad selloff across Asian equity markets.
The shift in risk appetite pushed investors toward U.S. Treasuries, pulling yields lower across the curve. Investment-grade credit spreads tightened on the safety bid, while spreads on riskier, growth-dependent issuers widened—a textbook re-pricing of equity duration risk that forced institutional portfolios to reassess long-term allocations.
Concerns center on the pace of AI development and the potential for oversupply in key hardware components, particularly high-bandwidth memory. Some analysts question whether current revenue growth justifies elevated valuations for AI-related firms, pointing to a disconnect between projected earnings and market prices. The Crypto Fear & Greed Index registered 29, indicating fear among investors.
A sustained technology selloff could shift market focus from inflation to growth concerns, adding pressure on central banks. Persistent equity volatility may complicate planned rate adjustments. A prolonged period of uncertainty tends to flatten the yield curve as investors price in slower economic expansion and lower long-term rates.
