Global Markets Take a Breather from AI Stock Selloff

Corrections in global equity markets are nothing new—they're natural and generally necessary for healthy development. The investment boom in artificial intelligence raises risks and fears reminiscent of the dotcom bubble era, which inflated around internet companies at the turn of the millennium. Back then, company valuations soared dramatically, accompanied by a significant expansion in leverage.

Investor skepticism—from figures like Warren Buffett, who famously never invests in what he doesn't understand—raised doubts about how long the boom could last. Eventually the bubble burst, triggering a serious crisis. Yet this creative destruction cleared the market and the emerging telecommunications industry of weak or fraudulent companies.

The giants that survived—the tech companies now called the "Magnificent Seven," including Alphabet and Amazon—are today leading the artificial intelligence revolution. This dynamic has once again unsettled market participants worried about a repeat of the turn-of-the-century events. However, leverage today is significantly lower, which preserves investment potential at least over the medium term, and the pace of AI technology adoption in the real economy is considerably faster. Moreover, massive capital investments—in data centers, for example—are stimulating economic growth in many countries and pulling adjacent industries along with them, creating synergy.

The current correction offers an opportunity, first, to realize profits from existing investments and taste the "AI sandwich," and second, for those who've been skeptical about the AI boom to enter the market during the correction phase, which would support market liquidity and establish a new Fibonacci support line.