Concerns over the rapid expansion of artificial intelligence development are intensifying across the United States, shaking investor confidence and pushing the stock market into a sustained decline. Fears of an emerging AI bubble, drawing comparisons to the notorious dot-com collapse of the early 2000s, are prompting widespread sell-offs, particularly in the technology sector. On November 18, major indices fell sharply once again, extending a downturn that has rattled both traditional markets and cryptocurrencies.
The mood in the market has been further unsettled by investor anxiety ahead of Nvidia’s July–September quarterly results, set to be released today. Nvidia, now the world’s biggest AI-driven semiconductor company, has become the bellwether for the broader AI sector. Analysts say that any sign of weakness in its earnings could trigger a far deeper shock across global markets. The Dow Jones Industrial Average dropped by 499 points, or 1.07 per cent, while the S&P 500 slipped 0.83 per cent. The tech-heavy Nasdaq Composite fell 1.21 per cent, marking the S&P 500’s fourth consecutive day of losses. The sell-off spilled into the cryptocurrency space as well, where AI-related fears helped fuel intense volatility. Bitcoin, which briefly plunged below the psychologically significant $90,000 mark for the first time since April, later rebounded to $92,000. The across-the-board liquidation in digital assets wiped out an estimated $1.2 trillion.
Echoes of the Dot-Com crash
The anxiety building around the AI boom has revived memories of the dot-com frenzy that swept US markets between 2000 and 2002. During the late 1990s, as the internet gained global adoption, investors raced to pour money into technology companies, many of them untested or lacking solid financial fundamentals. The Nasdaq index surged beyond 5,000, fuelled by expectations of limitless profits and a rush of speculative buying. Some investors even borrowed heavily to purchase tech stocks, convinced that the new digital age could only bring uninterrupted growth.
That optimism quickly turned into panic when it became clear that many of these companies were overvalued and unsustainable. Nervous investors began unloading shares, leading to a dramatic collapse. Amazon alone saw its share price drop by 95 per cent, and the Nasdaq plunged from over 5,000 to near 1,000. Household names such as eBay, Google, and PayPal also suffered steep declines. The fallout resulted in widespread job losses and a spike in bad loans, pushing the US economy into a period of financial strain. Market observers now warn that the current AI-driven investment frenzy, marked by massive capital infusions into model training, chips, and data centres, bears striking similarities to that earlier period of excess. A strong signal of the growing apprehension came recently when billionaire investor and hedge-fund manager Peter Thiel exited his entire position in Nvidia, selling $10 crore (approximately ₹886 crore) worth of shares. Analysts see the move as an indicator of rising institutional doubts about whether AI valuations are justified.
Impact of US government shutdown and Federal Reserve concerns
Although the US government shutdown has officially ended, its after-effects continue to weigh on market sentiment. The delay in the release of key economic indicators, including unemployment data, has created uncertainty about the true state of the US economy. Experts fear that the unreleased data may reveal deeper structural weaknesses. In this context, the Federal Reserve has signalled that it may refrain from altering the benchmark interest rate at its December meeting, preferring to wait for clearer economic signals. Uncertainty around AI’s economic impact has also influenced US Treasury yields. The yield on the 10-year Treasury note dipped to 4.13 per cent from 4.14 per cent, while the 30-year yield slipped to 4.73 per cent from 4.74 per cent.
Tech stocks lead market declines; Investors turn to gold as a safe haven
Amid the downturn, technology stocks once again bore the brunt of investor caution. Nvidia fell 3 per cent, Amazon dropped 4 per cent, and Microsoft declined 3 per cent. Nvidia’s shares have already lost more than 10 per cent in November. Even major advancements in AI investments did little to soothe market nerves. Microsoft and Nvidia recently announced a joint $15 billion investment into the AI startup Anthropic, which also disclosed plans to allocate $50 billion toward building advanced data centres. Despite these developments, the market remained unconvinced, as futures trading reflected continued pessimism. Dow futures slipped 0.1 per cent, S&P 500 futures dropped 0.2 per cent, and Nasdaq 100 futures fell 0.3 per cent.
With inflation expected to ease in the coming months and postponed economic reports soon to be released, tensions among US investors have increased. The unease has prompted many to reduce exposure to equities and cryptocurrencies, shifting instead toward safer investment vehicles such as gold exchange-traded funds. International gold prices, which hovered near $4,000 per ounce on Tuesday, climbed to $4,063 per ounce as demand for the traditional safe haven asset surged. Analysts say this could translate into higher prices in local Indian markets.
Asian and European markets show mixed reaction; Indian markets brace for volatility
Asian markets opened with mixed signals, taking cues from Wall Street’s slump. Japan’s Nikkei initially slipped 0.36 per cent after diplomatic tensions between China and Japan intensified over Taiwan. However, the index later recovered, finishing 0.6 per cent higher. In contrast, European indices were hit hard by global uncertainty, falling as much as 1.75 per cent.
The ripple effect from global indices was felt in India as well. The GIFT Nifty fluctuated between gains and losses in early trade, posting only a 4-point rise as of 7:21 am today. Analysts expect the Sensex and Nifty to face pressure throughout the day. However, optimism remains due to growing expectations that the long-pending India–US trade agreement may soon materialise, raising hopes of stronger economic cooperation. Another factor set to influence today’s market performance is Infosys’s Rs 18,000-crore share buyback programme, which begins tomorrow and continues until November 26. Market watchers say Infosys shares may witness increased activity ahead of the buyback window.
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