WEF Chief Warns of AI Bubble as Global Tech Stocks Face Major Correction

This analysis is based on the Reuters report [1] published on November 5, 2025, which reported World Economic Forum President Borge Brende’s warning about three potential financial market bubbles. The comments coincided with a significant global technology selloff, raising concerns about the sustainability of AI-driven market gains throughout 2025.

The WEF warning triggered immediate market volatility, with major indices experiencing substantial declines:

• Nasdaq Composite
  : Declined 2.04% to 23,348.64 [0]
• S&P 500
  : Dropped 1.17% to 6,771.55 [0]
• Dow Jones Industrial Average
  : Lost 251.44 points (0.53%) to 47,085.24 [0]

The technology sector suffered the most significant damage, declining 0.50% [0], with AI-related stocks experiencing particularly steep losses. The selloff extended globally, with Asian markets in Seoul and Tokyo falling approximately 5% from their recent peaks [2].

The market correction was not solely driven by the WEF warning but represented a convergence of multiple risk factors:

1. Valuation Concerns
   : The S&P 500’s forward price-earnings ratio climbed above 23, near its highest level since 2000 [2]
2. CEO Warnings
   : Goldman Sachs CEO David Solomon predicted “a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months,” while Morgan Stanley CEO Ted Pick noted “10 to 15% drawdowns that are not driven by some sort of macro cliff effect” [2]
3. Geopolitical Tensions
   : China reportedly banned foreign-made AI chips from state-funded data centers, directly impacting Nvidia and other US chipmakers [4]

President Brende specifically identified three potential bubbles: cryptocurrency, artificial intelligence, and debt [1]. Notably, he emphasized that governments haven’t been so heavily indebted since 1945, adding historical context to current market concerns [1]. This debt warning is particularly significant given the current high-interest rate environment and ongoing fiscal pressures globally.

The current correction appears to be primarily “positioning-driven” with recent outperformers taking the worst of the move, according to Pictet Asset Management [2]. However, the equal-weighted S&P 500’s outperformance (down only 0.7% vs. 1% decline in market-cap weighted index) suggests the selloff is concentrated in mega-cap technology stocks rather than broad market weakness [2].

Despite strong earnings, several AI-related stocks suffered significant declines:

• Palantir Technologies (PLTR)
  : Down nearly 8% despite beating earnings expectations with $1.18 billion in revenue (vs. $1.09 billion expected) and 21 cents EPS (vs. 17 cents expected), erasing $42 billion in market cap [3]
• Nvidia (NVDA)
  : Fell nearly 4% on Tuesday, down about 7% from last month’s peak [2]
• AMD
  : Lost nearly 4% despite more than doubling this year [2]

1. Valuation Reassessment
   : Continued pressure on high-multiple AI stocks if earnings growth fails to justify current valuations
2. Debt Sustainability
   : With global debt at post-WWII highs, any sovereign debt concerns could trigger broader market weakness
3. Geopolitical Escalation
   : Further restrictions in US-China tech competition could impact semiconductor supply chains and market access
4. Interest Rate Environment
   : Elevated rates continue to pressure growth stock valuations

1. Defensive Sector Strength
   : Consumer Defensive (+0.64%), Basic Materials (+0.32%), and Energy (+0.06%) showed relative strength [0]
2. Value Rotation
   : Berkshire Hathaway Class A shares climbed 2.6% as investors sought safety [2]
3. Equal-Weight Strategy
   : The outperformance of equal-weighted indices suggests opportunities in mid-cap and small-cap stocks

The November 5, 2025 market correction represents a significant inflection point for AI-driven equity performance. The convergence of WEF bubble warnings, Wall Street CEO caution, China’s AI chip restrictions, and elevated valuations suggests this may be more than a simple profit-taking episode. The S&P 500’s forward P/E above 23 (near 2000 levels) indicates stretched valuations that could face continued pressure [2].

Technical analysis suggests key support levels to monitor: S&P 500 around 6,700-6,750 range, Nasdaq near 23,200, with VIX spikes above 20 indicating increased fear levels [0]. The ADP report showing 42,000 jobs added in October suggests underlying labor market resilience, which could provide some support to equities [5].

Investors should monitor whether this marks the beginning of a sustained rotation away from high-growth, high-valuation names toward value-oriented sectors, or if it represents a temporary correction in the longer-term AI growth story.