Before Tuesday, Wall Street's broad S&P 500 index had risen 16.5 percent since the beginning of the year. Now investors have become increasingly concerned that the valuations of the stock market's leading stocks have rushed beyond reason and moderation.
The concern was not diminished by David Solomon, CEO of investment bank Goldman Sachs, warning of sharp market corrections.
"It's likely there will be a 10 to 20 percent decline in stock markets sometime in the next 12 to 24 months," he said at a seminar in Hong Kong early Tuesday, according to CNBC .
He was supported by Ted Pick, CEO of investment bank Morgan Stanley, who believes in 10–15 percent declines.
Wall Street consequently began Tuesday's trading in the red, and the bearish trend strengthened during later trading.
At the close, the Dow Jones Industrial Average had fallen 0.5 percent, the S&P 500 1.2 percent, while the Nasdaq's technology-heavy composite index had fallen 2 percent.
Suddenly reevaluated
AI-related stocks in particular fell on Tuesday, precisely the ones that had particularly driven the gains earlier this year.
Most major technology companies have recently released quarterly reports that were well received at the time, but are now suddenly being reevaluated.
“Their results were good but markets were disappointed by the lack of corporate initiatives throughout 2026,” writes Jim Reid, strategist at Deutsche Bank, in an analysis according to CNBC.
AI software company Palantir – which beat expectations in its quarterly report after the stock market closed on Monday – led the AI sector's decline, down 8 percent on Tuesday.
Seven magnificent falls
In addition, all of the very index-heavy so-called “Magnificent Seven” companies were among the losers. They are all more or less strongly AI-linked and are on the list of the world’s ten most valuable listed companies.
Other AI players such as cloud services giant Oracle, semiconductor manufacturers Broadcom and TSMC, as well as Chinese technology giant Tencent also lost significant ground during the trading day.
Chipmaker AMD fell 3.7 percent ahead of its quarterly report, which is expected after the stock market closes.
