AI Sparks a Market Meltdown — Here’s What You Need To Know Before Selling
Written by
Travis Woods
Edited by
Rebekah Evans
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Investors began February with something of a shock, when artificial intelligence (AI) made clear that it’s not just changing industries and technology — it’s shaking markets to their foundations. Here’s what you need to know before selling.
What Happened?
Major American stock indexes suffered through nearly a week of losses in early February as anxiety over AI spending (and how its reduced need for coders could impact the revenues of multiple tech companies) shock waved throughout Wall Street, with stocks and cryptocurrencies dropping hard and fast per CNN. By Feb. 5, 2026, the Dow Jones Industrial Average fell approximately 1.2%, while Nasdaq slid 1.6%.
These sell-offs reflect the broader movement of investor interest away from AI innovations towards safer, less tech-driven assets. Yahoo Finance reported that bitcoin also dropped, undoing recent crypto gains and highlighting how interconnected markets can collectively stumble into sell-offs when investor confidence is shaken.
What Went Wrong?
Investors became concerned about the massive budgets required for AI to thrive. Major tech companies such as Alphabet, Amazon and Microsoft have all announced AI infrastructure budgets of hundreds of billions in 2026 — a massive level of spending that has ratcheted investor skepticism regarding the possibility of AI profits.
What You Should Know Before Selling
Before you rush to sell in response to this news, consider that tech markets are volatile by nature, with such downturns often leading to rotations rather than outright crashes. According to Reuters, some traders have even viewed these stock dips as an opportunity to balance the market back towards value and income-based sectors and not risking as much on AI potential. That said, if your portfolio is heavily weighted in tech or crypto, now may be the time to review your own risk tolerance and goals.
Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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