AI selloff drives capital into European traditional sectors
The Nasdaq 100 suffered its largest weekly loss since April 2025 as semiconductor stocks plunged, while the DAX outperformed by over three points. Investors are rotating away from high-valuation AI plays toward traditional European sectors amid concerns over speculative behavior.
The Nasdaq 100 fell 5.5% last week, marking its steepest weekly decline since the "Liberation Day" selloff in April 2025. The index dropped every trading day, with the Philadelphia Semiconductor Index falling 11% over 11 consecutive sessions, a streak not seen since 2006. This sharp correction contrasts with the DAX, which rose 2.13%, creating a performance gap of nearly four points between the two benchmarks. The shift reflects a broader rotation out of AI-heavy technology stocks and into traditional sectors such as healthcare, consumer goods, and defense. Rheinmetall shares climbed 16% and BMW rose 7%, while AI-related names like Cohere, Sienna, and Rocket Lab lost between 25% and 26%. Nvidia fell 6.6% and ASML dropped 7.8%, despite ASML reporting orders secured through 2030 and TSMC citing stable demand with annual investments of $64 billion. The sentiment shift was partly triggered by comments from Broadcom's CEO, who compared AI investors to casino gamblers investing without a clear understanding of the technology's economic viability. While the Nasdaq 100's price-to-earnings ratio has compressed to 20, the DAX stands at 16. Analysts remain divided; some see 50% upside for Nvidia based on strong fundamentals, while others advise diversifying away from concentrated AI exposure to mitigate risk. Compute capacity remains tight, with Nvidia B200 rental prices near record highs and H100 prices up 50% in recent months, suggesting underlying demand persists despite the valuation reset.
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