Stocks declined sharply Thursday as a downbeat revenue outlook from chipmaker Broadcom intensified concerns over the sustainability of the artificial intelligence investment boom. The warning came alongside stronger-than-expected US job growth data, which stoked investor anxiety that the Federal Reserve may raise interest rates again. Broadcom's projected third-quarter chip revenue fell short of expectations, shaking confidence in the sector that has driven global stock rallies, particularly in technology-heavy markets. Ray Dalio, founder of investment firm Bridgewater Associates, said in a Bloomberg Television interview that the AI-driven surge, which pushed Nvidia's market value above $5 trillion, could form a bubble. "All great technology changes produce bubbles," he said. "Nobody can get it exactly right."
Wall Street's retreat triggered losses across Asian markets, with Tokyo's Nikkei 225 dropping 1.9 percent to 67,101.83 and Seoul also sharply lower. Hong Kong's Hang Seng fell 1.1 percent, Shanghai's Composite dipped 0.5 percent, and markets in Sydney, Singapore, Wellington and Taipei all registered losses. Jakarta's index dropped more than one percent, hitting its lowest level since 2021, as the rupiah weakened to a record low amid economic concerns. Oil prices, which had climbed toward $100 this week, fell after Israel and Lebanon agreed to a ceasefire contingent on a full halt in hostilities by Iran-backed Hezbollah and the withdrawal of its fighters from southern Lebanon. The deal followed US-led talks in Washington, with further negotiations scheduled later this month.
Iran's foreign minister stated there had been "no tangible progress" in peace talks with the United States, while attacks on US naval facilities in Bahrain and an airbase in Kuwait heightened regional tensions. A strike on Kuwait's civilian airport killed at least one person, damaged infrastructure, and briefly halted flights. Despite this, President Donald Trump said negotiations were "going very well" and could conclude "over the weekend." Global crude prices retreated, with West Texas Intermediate down 1.1 percent to $94.97 a barrel and Brent North Sea Crude down 1.2 percent at $96.60. The euro rose to $1.1609 against the dollar, while the dollar weakened to 159.89 yen. The Dow Jones closed down 1.2 percent at 50,687.07, and the FTSE 100 fell 0.4 percent to 10,332.30.
Ray Dalio highlights the risk of an AI bubble just as Nvidia's valuation exceeds $5 trillion, yet continues to justify massive spending to capture market share. His warning exposes a contradiction between acknowledging a speculative frenzy and endorsing the very spending that fuels it. Investors relying on his guidance face uncertainty when his analysis and advice pull in opposite directions. The global market sell-off reflects growing unease over this disconnect.
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