AI stock sell-off raises global recession risk

A brutal sell-off in artificial intelligence-related stocks is intensifying concerns that the resulting market slump could deepen a global economic slowdown and push major economies into recession. The S&P 500 has fallen 4% from its peak, while the Nasdaq is down 10%, with the downturn hitting Big Tech and AI-centric sectors particularly hard. Economists estimate AI-related effects boosted GDP growth by 0.2 percentage point across six advanced economies in 2025-2026, with positive wealth effects from high stock prices supporting consumer spending. The AI boom has offset energy crises, inflation, and geopolitical uncertainty, but a prolonged downturn could eliminate these gains. Risks are compounded by weak Chinese demand, shaky European growth, high energy prices, and borrowing costs, with analysts warning that a serious AI slowdown could make recession in advanced economies substantial.