The Nasdaq Composite Index has posted its sharpest decline in eight months in November, pressured by heavy selling in major artificial-intelligence stocks and slipping behind the S&P 500 Index for the first time in three months.
The Nasdaq has fallen 4.3 percent so far this month, compared with a nearly 2 percent drop in the S&P 500, marking its steepest retreat since March.
Much of the slide has been driven by weakness in sector heavyweights. Nvidia has dropped more than 8 percent in November, while Apple is down 1 percent. Meta has fallen 7 percent, Tesla has declined 11 percent, and Amazon has lost about 4 percent. The pullback came even as these stocks delivered solid third-quarter earnings, underscoring growing unease about the durability of the AI trade.
Concerns about an AI-driven bubble have intensified as prominent investors cut exposure to Nvidia, the flagship of the rally. Peter Thiel has sold his stake, SoftBank’s Masayoshi Son has exited his position, and Michael Burry, who held put options on the chipmaker with a notional value of over $1 billion, has deregistered his firm.
The anxiety reflects lofty valuations across the sector, fuelled by a surge in demand for technology shares, heavy investment in AI capacity, and rapid build-out of data centres that have deepened the circular momentum of the AI ecosystem.
Within public markets, a large share of upward earnings revisions in the S&P 500 has been driven by the Magnificent Seven, widely viewed as the key beneficiaries of the AI boom. Private-market valuations have also surged. One major AI firm now holds an estimated valuation of $500 billion with $1–1.5 trillion in committed investments, while Thinking Machines Lab, founded by former OpenAI executive Mira Murati, is seeking funds at a $50 billion valuation less than a year after its launch.
The strength of the AI narrative has pushed S&P 500 valuations to elevated levels, placing the index among the world’s most expensive markets and nearly two standard deviations above its long-term average.
Further, the selling pressure in both indices is expected as investors prepare for an eventful week of corporate results and economic signals. Nvidia, widely regarded as a bellwether for AI sentiment, will report earnings on Wednesday after weeks of debate over whether valuations have run too far. Retail majors Home Depot and Walmart will also release quarterly results, offering insight into consumer spending.
Economic data releases resume after government operations reopened only days ago, following the longest shutdown in history, which delayed several key October reports on employment and inflation. September’s jobs report is due Thursday and is expected to shed light on the pace of economic activity and the outlook for rate cuts.
The Federal Reserve will also release minutes from its October 28–29 meeting, which may provide more insight into the unusual split among policymakers following a quarter-point rate cut. Traders last week reduced the probability of another cut in December to below 50 percent, after officials signalled that further easing is not guaranteed.
