Global stocks sell-off as AI valuation concerns persist ahead of Nvidia earnings

Market Overview - Global equities experienced a significant decline due to concerns over inflated valuations and an uncertain macro environment, particularly ahead of Nvidia's earnings report [1][2] - The pan-European Stoxx 600 index opened lower, with mining and banking sectors leading the losses, while the Stoxx Europe 600 Technology Index fell by 1.4% [1][2] U.S. Market Performance - The three major U.S. indexes, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, closed in the red, reflecting a broader market downturn [2] - Asia-Pacific markets also saw declines, particularly in Japan and South Korea [2] Investor Sentiment - Market analysts suggest that the recent sell-off is a natural profit-taking phase following a strong market performance since April, with potential declines of about 5% from recent highs [2][4] - There is a prevailing skepticism in the market regarding the funding of mega-deals announced over the summer, indicating a shift in investor sentiment [5] Earnings and AI Sector - Nvidia's upcoming third-quarter earnings are highly anticipated, as the company is viewed as a key indicator for the AI industry, with many major players relying on its GPUs [3] - The earnings season has shown that major hyperscalers are still generating substantial revenue, with investors closely monitoring Meta as a barometer for future AI applications [4] Macro Environment and Risks - There is a noted element of de-risking among investors due to uncertainties surrounding a previously expected Federal Reserve rate cut, which may now be postponed [6] - Upcoming decisions from the U.S. Supreme Court regarding tariffs could further complicate the macroeconomic landscape [7][8] Cryptocurrency Market - The cryptocurrency sector is facing pressures from macro-driven sell-offs and forced liquidations, with Bitcoin and Ether experiencing significant declines of approximately 25% and 35% from their recent highs, respectively [9][10] Infrastructure Challenges - A critical issue facing the AI revolution and other sectors is access to electricity, which is essential for powering data centers, potentially slowing down growth in these areas [10][11]