AI-Driven Selloff Deepens, Echoing the Dot-Com Crash as Tech Giants Lose $1 Trillion

A brutal selloff in technology stocks deepened on Friday, with investors rotating out of software and data companies in a pattern that analysts warn echoes the dot-com crash of 2000. The UK’s FTSE 100 index dipped just 0.07%, but the broader market turbulence has wiped out nearly $1 trillion from the tech sector in just seven days, according to Bloomberg.

Deutsche Bank Flags Troubling Parallels to 2000

Analysts at Deutsche Bank cautioned that the current rotation out of software and data companies mirrors the early stages of the dot-com bubble’s burst. In 2000, tech stocks plummeted, but defensive sectors like consumer staples, utilities, and healthcare rallied, temporarily masking the broader market stress. However, as the tech selloff deepened, the S&P 500 ultimately ended the year over 10% lower.

“The longer and deeper the sell-off in a dominant sector becomes, the harder it is for the broader index to withstand the drag,” Deutsche Bank warned. This sentiment was echoed by Neil Wilson of Saxo UK, who noted that “most investors are likely nursing losses” as popular trades unwind.

AI Spending Fears Spark Market Turmoil

The selloff has been driven by growing concerns over excessive AI spending by tech giants. Amazon’s announcement of a $200 billion AI investment plan, following similar moves by Microsoft and Alphabet, has spooked investors who fear these companies are overextending themselves. Russ Mould of AJ Bell described the situation as a “week from hell for tech stocks,” with investors questioning the sustainability of AI-driven growth.

Bitcoin and Silver Also Take a Hit

The market turmoil has extended beyond tech stocks. Bitcoin fell to its lowest level in over a year, halving its value from its October 2025 peak. Silver also experienced wild swings, tumbling 19% in a single day after a 27% plunge earlier in the week. These losses have forced investors to liquidate positions across asset classes, exacerbating the broader market selloff.

TikTok Faces EU Charges Over Addictive Features

In Brussels, TikTok has been charged with breaching EU online content rules due to its addictive design. The European Commission criticized the app’s infinite scroll, autoplay, and push notifications, arguing they shift users’ brains into autopilot mode. TikTok has rejected the findings, calling them “categorically false and entirely meritless.”

Stellantis Scales Back Electric Ambitions

In a surprising move, Stellantis announced a €22 billion charge as it scales back its electric vehicle (EV) ambitions. The automaker, which owns brands like Vauxhall, Opel, and Fiat, cited slower-than-expected demand for EVs and shifting customer preferences. The decision sent Stellantis shares tumbling 12% in Milan, highlighting the challenges facing the EV transition.

UK House Prices Hit Record High

Amid the market turmoil, UK house prices rose at their fastest monthly pace in over a year in January, according to Halifax. The average property price reached a new all-time high of £300,077, driven by steady demand and improving affordability. However, regional disparities persist, with prices falling in southern England while rising in the north.

Market Outlook: Caution Ahead

As markets attempt to stabilize, analysts warn of continued volatility. The upcoming US employment data, delayed due to a government shutdown, will be closely watched for signs of economic resilience. Meanwhile, the Bank of England is expected to cut interest rates to 3% by early 2027, providing some support to borrowers.

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