European stocks retreated from record highs, with the Stoxx Europe 600 Index falling 0.7% and erasing most of its weekly gains. Energy and retail sectors led the decline, while the technology subsector suffered its worst weekly drop since March, losing 3.9%. The selloff was driven by renewed skepticism toward artificial intelligence valuations and profit-taking amid higher interest rates.
Zalando SE plunged as much as 11% after Germany's financial regulator launched a probe into the online fashion retailer's 2025 report over suspected accounting rule violations. Meanwhile, Banca Ifis shares cratered 37% after the Italian lender slashed its 2026 guidance and initiated a sale of its non-performing loan business following a Bank of Italy inspection. These company-specific shocks compounded broader market anxiety.
Global technology stocks faced a turbulent week as investors questioned lofty AI valuations, with price hikes from Apple and Microsoft fueling fears of AI-driven inflation. However, UniCredit strategist Christian Stocker characterized the volatility as a temporary correction within an intact long-term AI growth trend, noting that semiconductors remain the backbone of the cycle. The key question is whether this is a healthy pullback or the start of a deeper rotation out of tech.
Key Takeaways
- European tech stocks posted their biggest weekly drop since March, with the Stoxx 600 falling 0.7% from record highs.
- Zalando shares tumbled up to 11% on a German regulatory probe into accounting practices.
- Banca Ifis lost 37% after cutting 2026 guidance and moving to sell its non-performing loan portfolio.
- Analysts view the tech selloff as a valuation-driven correction, not a fundamental break in the AI growth story.
Insights & Analysis
- The simultaneous regulatory and earnings shocks at Zalando and Banca Ifis suggest that sector-wide sentiment is fragile, and company-specific risks are amplifying macro-driven volatility.
- If AI-driven inflation fears persist, central banks may face pressure to keep rates higher for longer, which could further pressure growth stocks and accelerate a rotation into value and defensive sectors.