European stocks slip as tech valuations and Iran tensions weigh

European equities fell on Tuesday as doubts about the sustainability of the AI-driven rally and escalating Middle East tensions reduced risk appetite. The pan-European STOXX 600 index fell 0.4% to 647.13 points by 0955 GMT. Technology stocks lost 1.6%, following pressure on Asian tech benchmarks earlier in the day.

Disappointing results from major US hyperscalers in the previous week fuelled concerns about global technology valuations. Apple’s subdued gross margin forecast for the holiday quarter added to investor caution. Gilles Guibout, head of European equities at BNP Paribas Asset Management, said European valuations had cooled while earnings dynamics remained positive. He expected demand for computing capacity to sustain investment, although some projects could be delayed.

Drax jumped 9% after partnering with Brookfield and AI infrastructure platform Radiant to develop a data centre in a project that could attract more than £20 billion ($26.8 billion) in investment. Bayer gained 4.4% after raising its 2026 profit forecast, with healthcare viewed as a potential diversifier against AI-related volatility.

A US official said American forces struck Iran’s Qeshm Island in the Strait of Hormuz, a day after Iran signalled openness to peace talks. Brent crude gained 1.3% to more than $100 a barrel. Investors also awaited US midterm election results, which Guibout said could affect the outlook for further AI investment.