The financial markets are facing a stark reality check as warnings from the very top of the technology sector send shivers through the global economy. Sundar Pichai, the CEO of Alphabet (Google’s parent company), has publicly cautioned that the current fervor surrounding Artificial Intelligence is rife with “irrationality.” In a sobering interview, he made it clear that should this tech bubble burst, “no company is going to be immune.” This admission from a key industry insider has exacerbated a sell-off that has already wiped more than $1 trillion from the cryptocurrency market in just six weeks.
The impact of these jitters is visible across every major index. In the UK, the FTSE 100 has logged its worst performance since April, falling for four consecutive days. Similar patterns are emerging in Europe and Asia, where the Stoxx 600 and Japan’s Nikkei 225 have posted sharp declines. The synchronized drop suggests that investors are heeding the warnings from tech leaders and banking executives who believe valuations have detached from reality.
Cryptocurrency has taken the hardest hit, serving as the frontline for this risk-off sentiment. Bitcoin has plummeted 27% to $91,212, erasing months of growth. The digital asset market is often seen as a proxy for risk appetite; when it crashes, it typically signals that investors are fleeing to safer ground. However, even traditional safe havens are struggling, as gold prices also dipped in the face of changing monetary policy expectations.
Adding to the chorus of concern is Sebastian Siemiatkowski, the CEO of Klarna. He expressed deep nervousness regarding the massive capital being funneled into AI infrastructure and data centers without sufficient strategic thought. He highlighted that companies like Nvidia have reached staggering market caps—$4 trillion in Nvidia’s case—fueled largely by automatic investments from pension funds and index trackers, rather than active, thoughtful decision-making.
As the market digests these warnings, the mood is shifting from FOMO (Fear Of Missing Out) to fear of capital loss. JP Morgan’s Daniel Pinto noted that a correction is not just possible but probable, and it would likely drag down the entire S&P 500. With the Federal Reserve unlikely to cut rates as aggressively as hoped, the “irrational” boom may be facing its final curtain.