Nigel Green calls the global tech sell-off a ‘Healthy reality check’ for AI valuations

Global stock markets are experiencing a brutal “cold shower” as investors finally wake up from a 24-month trance of blind artificial intelligence optimism. According to Nigel Green, CEO of global financial advisory giant deVere Group, the severe wave of tech sell-off sweeping through the technology and semiconductor sectors is exactly what happens when a market suddenly demands hard proof instead of lofty promises. 

For months, investors have been willing to pay almost any premium for the mere suggestion of AI-driven growth. Now, Green notes, the market is fundamentally reassessing whether the hundreds of billions of dollars poured into data centres, software, and chips will actually generate the earnings required to justify today’s sky-high valuations.

“For the last two years investors have been willing to pay almost any price for the promise of AI-driven growth,” Green observes. “Suddenly they’re asking the questions they should have been asking all along. Where are the returns? How sustainable is the spending? And what happens if the global economy proves weaker than we expected?”

This urgent demand for tangible returns triggered a dramatic stampede for the exits across the globe, perfectly illustrating Green’s warning about the dangers of an overcrowded market. Because the AI narrative had become one of the most saturated trades in global financial history, the exit door shrank rapidly at the first sign of hesitation. 

The global tech sell-off amidst AI reality check

The downturn began in Asia, where South Korea’s tech-heavy KOSPI index plunged 10%, dragged into the abyss by staggering losses of over 12% in semiconductor giants Samsung Electronics and SK Hynix.

The reality check quickly infected European and American markets. The pan-European Stoxx 600 stumbled, pulled down by a severe drop in its technology index that heavily punished semiconductor stalwarts like STMicroelectronics and Dutch equipment manufacturer ASMI.

Across the Atlantic, the pre-market carnage spared almost no one. Nasdaq 100 futures took a heavy hit as semiconductor heavyweights faced intense pressure, with Intel plummeting nearly 8%, while Micron, AMD, and Nvidia all sustained significant losses. Even adjacent market darlings felt the sting, with SpaceX extending its dramatic decline, falling a further 3.6% in pre-market trading after suffering a 16% slide during Monday’s session and consumer-facing mega-caps like Amazon and Meta caught in a sharp rotation away from the so-called Magnificent Seven.

Also read: The SpaceX IPO isn’t draining crypto liquidity: Why the market has it wrong

However, Green emphasises that this violent market reaction is about much more than just a sudden distaste for silicon and cloud infrastructure. It represents a broader unravelling of the macroeconomic fairy tale that has artificially propped up valuations across the board. 

Investors are finally challenging the comfortable assumptions that economic growth would remain flawlessly strong, that central bank rate cuts would arrive exactly on schedule, and that recession risks had been permanently dealt with. 

With economic growth visibly slowing in key areas and everyday consumers becoming increasingly selective, Green points out that the recession question is quietly creeping back into institutional conversations, making the massive financial commitments of the AI arms race look significantly riskier.

Ultimately, the deVere chief views this dramatic reshuffling not as the dawn of a financial crisis but as a deeply necessary market normalisation. The rapid markdown of tech expectations proves that the fundamental laws of economics have not been abolished by generative AI or Silicon Valley hype. 

“This is a reality check. It appears that investors are rediscovering something fundamental: earnings and valuations still matter, and economic cycles haven’t been abolished,” he noted. “The market is marking down expectations. What we’re witnessing now is investors demanding proof instead of promises. That shift can be uncomfortable, but it’s ultimately healthy,” Green concludes.

Earnings, sustainable cash flow, and sensible valuations still dictate long-term success. While the sudden shift from blind optimism to demanding corporate accountability is undeniably uncomfortable for over-leveraged investors, Green concludes that it is an ultimately healthy transition that will build a far more stable foundation for global markets going forward.