Global stocks fall as AI trade goes into reverse

Dan Ives and the semiconductor sector rally

This performance prompted a sharp rise in the company’s share price—which had closed at $1,048.51 on Tuesday—and provided a boost to NVIDIA, AMD, and the broader semiconductor complex. Wedbush Securities’ Dan Ives described the results as a drop the mic quarter, noting in a note to clients that tech investors would be in a very positive mood and breathe a sigh of relief. The results arrived during a week when bears had been sharpening their claws, with chatter about AI demand peaking growing louder in the corridors of hedge funds and on trading desks from Midtown Manhattan to Tokyo’s Marunouchi.

Kospi index and Asian market volatility

The optimism surrounding Micron followed a week of significant pressure on global equities, particularly in Asia. The Kospi index in South Korea plunged more than 10%, triggering a 20-minute circuit breaker halt, which the market equates to pulling the emergency brake. Japan was not spared, with the Nikkei 225 dropping 1.5% and the broader Topix losing 0.8%. Traders in Asia dumped semiconductor giants amid fears that the rally had become overstretched. Memory-chip heavyweight SK Hynix fell more than 12%, while Samsung Electronics dropped over 10%.

For more on this story, see SpaceX Stock Falls Below IPO Price Amid Volatility Before Starship Flight.

The selloff hit the very companies that had been among the biggest beneficiaries of the AI spending frenzy. The sharp decline highlighted a growing concern across global markets: while AI demand remains strong, valuations have sprinted so far ahead that even a small wobble can trigger a large reaction when traders rush for the exits. This sentiment was echoed by Christopher Wood, global head of equity strategy at Jefferies, who noted that the AI-driven trade could come under the lens this year. During the Business Standard Manthan Summit in New Delhi, moderated by Puneet Wadhwa, Wood stated that hyperscalers plan $620 billion in AI spending, but markets are now questioning returns and potential excess data centre capacity risks.

Wood added that India is seen as a reverse AI trade, benefiting only if global AI capital expenditures slow or an investment collapse occurs. The day that the market realises that they've overspent (on AI) and there's a sudden collapse in the capex, then India can start outperforming again, Wood said. Conversely, Nilesh Shah, managing director at Kotak Mutual Fund, argued that for India, the “AI story” is still unfolding. Shah noted that Indian IT stock selling appears excessive, with insiders holding positions and the long-term growth outlook still under debate.

Geopolitical instability also introduced uncertainty into the financial markets. Stocks erased losses and rallied late on Monday after Donald Trump provided comments on the Iran war, telling CBS News that the war is very complete, pretty much, and well ahead of the four to five week timeline he indicated the previous week. Oil prices had spiked above $100 per barrel for the first time since Russia’s invasion of Ukraine, but pulled back as tensions appeared to ease. Brent, the international benchmark, fell 3% to $90.17, while US oil fell 5% to around $86.50. Carol Schleif, chief market strategist at BMO Private Wealth, stated, Investors were hoping cooler heads would prevail in the Iran war this weekend, and instead, tensions escalated, which is exacerbating last week's stock market declines and oil price spikes. She added that triple digit oil prices rapidly translate into sizable increases at the gas pump, a dynamic that spooks investors and consumers alike.

This follows our earlier report, AI Valuation Concerns and Geopolitical Tensions Weigh on Tech Stocks.

Global Mofy AI trading volume surge

Market activity also saw unusual volume in Global Mofy AI (NASDAQ:GMM). On July 10, 2026, the stock shot up 116.8% to $4.01, with volume reaching 107.64 million shares—over 60 times the 1.79 million Class A shares the company said would be outstanding following its June reverse split. The move was attributed to market structure, as no new filing explained the surge. If all trades happened at the day’s $2.92 low, the gross trading value would top $314.3 million, which is almost 44 times the Class A market value of approximately $7.18 million. The company had previously raised about $8 million gross in May by selling 8.247 million shares plus two different warrant series to boost working capital.