American stock indices started the week with a notable decline. Investors, accustomed to the continuous growth of tech companies, faced an unpleasant reminder: even the fastest-growing markets are not immune to pullbacks. Market participants are now focused on the artificial intelligence sector, which has been the main driver of growth in recent months, and appears to be the first area of vulnerability.

Sentiment is Changing

On Tuesday, the Dow Jones Industrial Average fell 251 points (–0.5%), while the S&P 500 and Nasdaq Composite lost 1.2% and 2%, respectively. The decline is attributed to warnings from executives of the two largest investment banks, who believe that after the recent surge, the markets need a "reset."

Over the last two years, the technology sector, particularly companies engaged with artificial intelligence, has experienced a real boom. The market capitalizations of several companies have risen multiple times, and the stocks of individual issuers have skyrocketed by hundreds of percent. But now experts acknowledge that expectations have become excessive.

Many investors have begun to reassess their positions. Even good earnings reports have ceased to function as catalysts. A prime example is Palantir, whose stock plummeted by 8% despite a strong revenue forecast of around $1.33 billion for the current period. The market had already priced in a perfect scenario, and any deviation is met with negative reactions.

Why Investors are Alarmed

Statements from banking leaders about a potential 10-20% correction in the next 12-24 months served as a cold shower for a market overheated by AI euphoria. The technology sector in the U.S. resembles the dot-com era: the word "AI" features in every news piece, and company valuations are rising faster than their actual earnings.

Bank executives are not panicking. They state that such downturns are normal for a bull market. A 10-15% drop is a natural part of the cycle, where investors adjust their expectations, and the market clears excess optimism.

However, this sounds alarming to short-term traders, especially given that a correction could coincide with other risks—such as a prolonged U.S. government shutdown, uncertainty around interest rates, and warnings from the Federal Reserve and IMF about asset overvaluation.

Technology Under Pressure

The decline affected almost all leaders in the AI sector, including Nvidia, AMD, Amazon, Oracle, and others, who were symbols of the tech boom, resulting in losses. Stocks that had risen by tens and hundreds of percent since the start of the year are now hostages to their own records. Any reason provokes profit-taking.

Interestingly, even a positive backdrop does not provide salvation. On Monday, markets closed mixed: Nasdaq and S&P 500 showed gains, but the Dow Jones had already dropped by more than 200 points. Investors are clearly nervous, and risk appetite is decreasing.

Where to Seek Stability

While the U.S. experiences a volatile period, major players are closely watching Asia. Despite caution in forecasts, bankers remain optimistic about China, India, and Japan. A recent trade agreement between the U.S. and China has been viewed as a sign of potential revitalization in global trade.

Asian markets are growing on the back of sectors such as artificial intelligence, electric vehicles, and biotechnology—areas in which the U.S. still holds leading positions but is facing saturation.

For investors, this may present an opportunity to diversify capital and reduce dependence on American tech giants, whose stocks have become too expensive in recent months.

Summary

The U.S. stock market again reminds us that growth is not infinite. A correction is not a catastrophe but a natural stage that clears the market of overheating. Stocks of companies in the artificial intelligence sector remain drivers of the future, but they will need to undergo a test of real effectiveness and the sustainability of their business models.

Currently, investor sentiment can be described as cautious optimism laced with fatigue. The market is still strong, but there is a growing awareness that the time of unchecked records is drawing to a close. A period of reflection is approaching—new opportunities for growth often emerge in such moments.