As soaring AI stocks take a turn, investors say not to panic yet

Ankur Banerjee · Thomson Reuters

· Posted: Nov 05, 2025 10:33 AM EST | Last Updated: November 5

Wall Street's main indexes were subdued astatine the unfastened connected Wednesday, pursuing a tech-led selloff successful the erstwhile league implicit surging valuation concerns.

At the opening bell, Wall Street's main indexes were muted: the Dow Jones Industrial Average roseate 0.03 per cent to 47,097.31, the S&P 500 fell 0.03 per cent to 6,769.77, portion the Nasdaq Composite roseate 0.04 per cent to 23,358.075.

But selling extended into a 2nd time connected Wednesday successful planetary markets, leaving those successful Seoul and Tokyo astir 5 per cent beneath peaks reached connected Tuesday morning.

Falls successful technology stock prices from the time earlier are origin for caution but not panic yet, accidental brokers and investors who person been riding a runaway marketplace to record highs and immoderate stretched valuations.

Hardest deed person been the biggest winners of a rally that has vaulted chipmaker Nvidia from a niche subordinate to the most valuable institution connected Earth.

"The selloff appears to beryllium mostly positioning-driven, with recent outperforming names taking the worst of the move," said Jon Withaar, elder portfolio manager astatine Pictet Asset Management in Singapore.

There was nary evident trigger for the pullback, which began with an unexpectedly antagonistic absorption to beardown financial results astatine Silicon Valley information and artificial quality firm Palantir Technologies.

Traders enactment connected the level astatine the New York Stock Exchange earlier this year. (Brendan McDermid/Reuters)

Shares successful the marketplace darling finished down astir 8 per cent on Tuesday, and fell a further 3 per cent successful extended trade.

"So radical are up to their noses successful these AI stocks," said Herald van der Linde, caput of equity strategy for Asia Pacific at HSBC. "But however overmuch further tin they go? How overmuch much can they buy? And my content is that what we're going to spot is a breather ... and the breather could travel with a rotation."

On Tuesday, Nvidia shares fell astir 4 per cent connected Wall Street to trade down astir 7 per cent from past month's peak. Meanwhile, suppliers, competitors and firms up and down the AI proviso concatenation came in for a beating successful Asia connected Wednesday.

"It's reasonably broad selling successful the risk-leverage portion of the market, which to america looks similar short-term profit-taking," said Angus McGeoch, Barrenjoey's caput of equities distribution for Asia successful Hong Kong.

He said money managers with an oculus connected their 2025 results would beryllium speedy to duck retired of the downturn astatine this clip of year, but are not yet looking for a wholesale exit.

"Obviously (they) don't privation to springiness up a lot, fixed the year's been benignant ... but if the marketplace looks similar it wants to go again, past I don't deliberation it would instrumentality overmuch to get people back involved."

Fears of an AI bubble

Markets person for months marched past worries implicit elevated interest rates, stubborn inflation, commercialized turmoil and a patchy global system starring to questions astir whether the artificial intelligence roar is simply a bubble waiting to burst.

Tuesday's 2 per cent driblet successful the Nasdaq followed a rise of much than 50 per cent from April lows.

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Wall Street chiefs Ted Pick of Morgan Stanley and David Solomon of Goldman Sachs gave dependable to immoderate of the unease in markets and raised the imaginable of a pullback astatine an investment summit successful Hong Kong.

Big sanction capitalist Michael Burry, who famously predicted the illness of the U.S. lodging bubble which led to the 2008 fiscal situation and is depicted successful the movie The Big Short, has stake against some Nvidia and Palantir, which has fuelled fears astir a bubble.

That determination comes conscionable days aft Burry posted to X, saying "Sometimes, we spot bubbles. Sometimes, determination is thing to bash astir it. Sometimes, the lone winning determination is not to play."

Moreover, South Korea's banal speech cautioned against investing successful chipmaker SK Hynix — a regular informing for the stock that had tripled successful 12 months but capable to trigger a six per cent two-day fall.

Matthew Haupt, pb portfolio manager astatine Wilson Asset Management successful Sydney, viewed the downturn arsenic investors taking money disconnected the array up of Wednesday's U.S. Supreme Court hearing connected the legality of tariffs.

"I've been buying today," helium said. "I anticipation I'm right."