Enterprise

AI Stocks Collapse, Dragging Market Down

Krishn patel

Krishn patel

— 2 min read
  • The U.S. stock market saw a significant downturn, with the tech-heavy Nasdaq Composite falling 1.5% and the S&P 500 dropping 0.9%.
  • The decline was primarily driven by a sell-off in major artificial intelligence (AI) stocks amid growing concerns over their extremely high valuations.
  • Key AI players like AMD, Qualcomm, Palantir, and Nvidia all experienced notable drops, reversing a brief recovery from the previous day.
  • Mounting economic fears exacerbated the sell-off, fueled by data revealing the highest number of October job cuts in 22 years.

U.S. stocks retreated sharply on Thursday, as the high-flying artificial intelligence sector faced a reality check over what many on Wall Street are calling "eye-watering valuations." The sell-off dragged down the broader market, sending a wave of concern through investors.

The Nasdaq Composite led the losses, shedding 1.5%, while the S&P 500 traded down by 0.9%. The Dow Jones Industrial Average also felt the pressure, slipping 364 points, or 0.8%, as market sentiment turned sour.

The Great AI Sell-Off

The epicenter of Thursday's downturn was the AI space, which has been the market's darling for much of the year. Shares of AI chipmaker Advanced Micro Devices (AMD), a standout performer in the previous session, tumbled 7%. Qualcomm also shed 4% despite posting better-than-expected quarterly results.

The pain was widespread across the sector. Enterprise AI firm Palantir Technologies and software giant Oracle dipped 3% and 4%, respectively. Even the undisputed leader of the AI boom, Nvidia, saw its shares slide, alongside fellow "Magnificent Seven" member Meta Platforms. This sharp reversal came just a day after many of these stocks had attempted a rebound, highlighting the growing volatility and investor nervousness surrounding their lofty prices.

"We’re still very early in the AI super-cycle," Shirl Penney of Dynasty Financial Partners had noted on CNBC, suggesting significant long-term investment is still expected. However, the short-term view on Thursday was dominated by fear.

One notable exception was Marvell Technology, which saw its shares climb almost 1% following a report that Softbank had considered a potential takeover of the chipmaker.

Broader Economic Jitters

Adding to the market's anxiety were troubling signs from the U.S. labor market. A report from Challenger, Gray & Christmas revealed that job cuts in October surged to 153,074, a staggering 183% increase from September. This figure represents the highest number of layoffs for an October in 22 years, painting a shaky picture of the economy. The report also noted that 2025 is on track to be the worst year for layoffs since the financial crisis in 2009.

This grim economic data is particularly potent given the ongoing U.S. government shutdown, which, at 37 days, is now the longest in the nation's history. The shutdown has halted the release of other key economic data, leaving investors to navigate with limited information.

Further uncertainty stemmed from Washington, where the Supreme Court heard arguments over the legality of the Trump administration's trade tariffs. The possibility of a ruling that could roll back the tariffs adds another layer of complexity for a market already on edge.

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