Wall Street rises as materials and crypto stocks offset continued bond sell-off
Investing.com --Global stocks are selling off on Tuesday with S&P 500 and Nasdaq 100 futures under pressure as a broad risk-off move hits markets following warnings that crowded positioning in artificial intelligence names is starting to unwind.
"What’s driving the tech weakness? As is usually the case in instances such as this one, it’s more an accumulation of factors over the last several weeks rather than a single headline from the preceding 12-24 hours that’s triggering the slump," Vital Knowledge analyst Adam Criasfulli wrote.
Asian markets, including the Nikkei 225 and Hang Seng, fell overnight, handing a negative tone to European traders. South Korea’s KOSPI closed as much as 10% lower with AI winners Samsung Electronics and SK Hynix taking heavy hits. Citi strategists led by David Chew warned yesterday that KOSPI levels are "now back to extremes" after the recent move higher.
The Euro Stoxx 600 extended those losses during the European morning session, falling 1.1%, and U.S. futures have since deepened the move, putting Wall Street on course for a sharp open.
"Investors increasingly recognise the crowding and ’same bus’ dynamic, and many are beginning to question how much upside remains versus risk," UBS strategists led by Gerry Fowler warned yesterday.
"In effect, we think the market still believes in the AI story structurally; but tactically, conviction is eroding at the margin, and some hedge fund investors have begun trimming exposure."
The "same bus" metaphor captures a risk that has quietly accumulated across the AI-driven bull run of 2025 and into 2026: an enormous concentration of institutional capital in a narrow cluster of semiconductor designers, hyperscale cloud providers, memory chip makers, as well as broader AI infrastructure names.
"We note the risk that capex upgrades abate as activity reaches a ’speed-limit’," Fowler added, "leaving a lack of revisions in the supply chain and expensive, crowded positions vulnerable to underperformance."
In other words, the earnings-revision engine that has justified premium valuations across AI supply chain stocks may be approaching its limit. If the wave of hyperscaler capital expenditure announcements that powered upward estimate revisions through 2025 begins to plateau, the fundamental underpinning for expensive consensus-long positions weakens materially.
This backdrop was already developing before Tuesday’s broad move. Technology stocks weighed on the Nasdaq Composite and S&P 500, offering an early signal of the pressure that has now broadened into a global selloff.
"Nasdaq bullish positioning remains extended, both in size and profitability, with longs deeply in profit. The concentration of profitable longs leaves downside risks elevated," Chew wrote in a note.
For investors watching what comes next, the key question is whether the tactical trimming UBS describes accelerates into something more disorderly, or whether dip-buyers step in to defend the structural AI thesis the bank says still commands broad belief.
Much will depend on whether fresh catalysts, namely new capex commitments from the hyperscalers or evidence that AI monetization is outrunning infrastructure costs, emerge to restart the upward revision cycle. One of the best-performing names over the past 12 months, Micron, is set to report earnings on Wednesday after the market close.
