U.S. equities slipped Tuesday as doubts over the AI rally spurred a tech sell‑off. The Nasdaq Composite slid 2.2% to 25,587, while the Dow Jones slipped 0.09% to 51,667 and the S&P 500 dropped 1.44% to 7,365. The decline erased $200 billion in market value, underscoring the fragility of the AI hype.

Fund manager Eric Marshall of Hodges Capital said the market is rotating out of sectors that have become “overbought” and “overheated.” He noted that demand for AI optical switches, memory and compute chips remains strong, but warned that growth cannot be infinite. He cited recent earnings misses. Such rotation, he added, is typical of healthy bull markets and helps prevent a prolonged correction.

The sell‑off spilled into Asia, where South Korea’s KOSPI fell nearly 10% after Samsung Electronics, a major chip supplier, saw its stock tumble. Samsung’s rally earlier in the year had been tied to soaring data‑center demand, a trend now under pressure. Analysts warn that further pullbacks could pressure valuation multiples, signaling investors are reassessing AI‑driven valuations across both U.S. and overseas markets.