US equity markets closed sharply lower on Tuesday, with the Nasdaq Composite falling 2.2% as heavy selling in major artificial intelligence stocks weighed on the tech-heavy index.
The decline extended losses across the broader market, with the Dow Jones Industrial Average dropping 395 points and the S&P 500 also posting significant losses.
The selloff reflects a growing "reality check" among investors regarding the scale of capital expenditure in the AI sector.
Market participants are increasingly scrutinizing whether current investment levels are sustainable, leading to a broad rotation out of high-valuation technology names.
This sentiment shift has placed a brake on the recent frenzy surrounding AI-related equities.
Selling pressure was concentrated in the technology sector, where intensifying profit-taking drove the index lower.