June 26, 2026, (Inside AI) — Global stock markets are flashing warning signs as AI investment exuberance meets macroeconomic headwinds. South Korea’s Kospi index plunged nearly 10 per cent on Tuesday, leading a sharp sell-off across Asia. Japan’s Nikkei 225 dropped 3.5 per cent, while the tech-heavy Nasdaq has fallen almost 4 per cent since last week. The trigger? Mounting doubts over whether massive AI capital spending will ever generate adequate returns.
Investors are questioning the sky-high valuations of AI-linked firms. Goldman Sachs projects that hyperscalers will pour over $5 trillion into technology and data centers by 2030. Yet monetization paths remain unclear, evoking memories of the dotcom bubble. Back then, excessive exuberance inflated tech shares until the burst, from which Nasdaq took years to recover.
The AI frenzy has been global. In South Korea, SK Hynix and Samsung have attracted euphoric investment, now commanding a sizeable share of the local market. Japan has seen surges in Advantest, Tokyo Electron, and Kioxia. In the US, AI giants Anthropic and OpenAI are advancing toward initial public offerings, following SpaceX‘s recent mega IPO, pulling in even more capital.
But macro reality may deflate the exuberance. Historically, central bank rate hikes have pricked asset bubbles. With US inflation ticking up—CPI rose to 4.2 per cent in May—the Federal Reserve might tighten policy in coming months. Such a move could reverse the flood of cheap money that has fueled AI bets.
Read: South Korean Chip Stocks Plunge as AI Boom Fears Rattle Markets
India, however, remains an outlier. Foreign capital has been fleeing the country. Portfolio investors pulled out $18.9 billion in 2025, and outflows this year are nearing $30 billion. Net FDI dwindled to just $1 billion in 2024-25 and $7.7 billion in 2025-26. Combined with high crude prices, this pressured the rupee. Recent oil price softening and capital flow measures have helped stabilize the currency, but more reforms are needed to boost India’s investment appeal.
Read: AI Selloff Triggers Worst Quant Fund Losses Since August 2025
The divergence underscores a broader reckoning: AI hype is colliding with fiscal and monetary constraints. While some regions ride the wave, others grapple with structural outflows. The coming months will test whether AI can deliver on its trillion-dollar promise—or if history repeats itself.
