Global stocks tumble as Alphabet CEO warns of AI bubble
Global stock markets tumbled on Tuesday as warnings from Google's chief executive about a potential artificial intelligence bubble triggered a broad sell-off in technology shares, with investors growing increasingly anxious about inflated valuations ahead of key earnings reports and economic data.
Sundar Pichai, CEO of Alphabet, told the BBC in an interview published Tuesday that "no company is going to be immune, including us" if the AI bubble were to burst. He acknowledged "elements of irrationality" in the current AI investment wave, drawing parallels to the "irrational exuberance" that preceded the dotcom crash. His comments echoed warnings from JPMorgan CEO Jamie Dimon, who previously told the BBC that some AI investments would likely be "lost".
Asian markets bore the brunt of Tuesday's sell-off, with Japan's Nikkei 225 plunging 3.2%, its steepest decline since April. South Korea's Kospi fell 3.3%, while Hong Kong's Hang Seng dropped 1.7%. European markets followed suit, with London's FTSE 100 down 0.9%, Germany's DAX sliding 1.2%, and France's CAC falling 1.3%. On Monday, the S&P 500 declined 0.9% to 6,672.41, marking its worst three-day performance since April.
Nvidia Earnings and Debt Concerns Weigh on Markets
Investor anxiety intensified ahead of Nvidia's third-quarter earnings report, scheduled for Wednesday after market close. Wall Street analysts expect revenue of approximately $54.9 billion, representing a 56% year-over-year increase, though significantly lower than the triple-digit growth rates the chipmaker previously enjoyed. Nvidia's stock has declined 7.9% in November, though it remains up nearly 40% for the year.
Adding to market jitters, major technology companies have launched a wave of debt issuances to fund AI infrastructure expansion. Amazon completed a $15 billion bond offering Monday, its first in three years, following similar moves by Meta, which raised $30 billion, and Alphabet, which secured $25 billion. According to Morgan Stanley estimates, Meta, Amazon, and Alphabet are expected to spend approximately $400 billion this year on AI-related infrastructure.
"This is not so much about a sudden trigger but rather a fatigue in positioning, sensitivity to valuations, and an increasing feeling that the rally requires a break," said Tareck Horchani from Maybank Securities in Singapore.
Crypto Crash and Fed Uncertainty
Bitcoin fell below $90,000 on Tuesday for the first time in seven months, erasing all its 2025 gains and intensifying the risk-off sentiment across financial markets. The cryptocurrency dropped to as low as $89,420, down from its October peak of $126,250. The decline came as U.S. spot bitcoin ETFs saw outflows exceeding $3 billion over three weeks.
Meanwhile, expectations for a Federal Reserve rate cut in December have plummeted to around 40-48%, down from over 90% a month ago, as investors await delayed employment data scheduled for Thursday. Fed Governor Christopher Waller said Monday that a December cut would "provide additional insurance" against labor market weakening, though market sentiment remains cautious.
