Nasdaq Hits 8-Month Low in November Amid AI Stock Decline

Bassyonni

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Nasdaq Hits 8-Month Low in November Amid AI Stock Decline

The Nasdaq Composite Index has experienced its most significant drop in eight months this November. Heavy selling in key artificial intelligence stocks has led to this decline, causing the index to lag behind the S&P 500 for the first time in three months.

Nasdaq’s Decline in November

As of mid-November, the Nasdaq has fallen by 4.3%, while the S&P 500 has only decreased by nearly 2%. This retreat marks the steepest loss for the Nasdaq since March. The decline has primarily been driven by weakening performance in major tech stocks.

Key Stock Performances

Nvidia: Down more than 8% in November.
Apple: Decreased by 1%.
Meta: Fell by 7%.
Tesla: Dropped 11%.
Amazon: Lost about 4%.

This downturn occurs despite these companies reporting solid earnings in the third quarter, highlighting growing concerns about the sustainability of the AI market. With this anxiety comes speculation about a potential bubble. Major investors are adjusting their positions amid the uncertainty.

Investor Sentiment

Notable figures such as Peter Thiel have sold their stakes, while SoftBank’s Masayoshi Son has exited his position. Michael Burry, famous for his market insights, has deregistered his firm after holding significant put options on Nvidia, valued at over $1 billion. This shift illustrates the growing skepticism regarding high valuations in the sector.

Market Valuations and Future Outlook

The AI sector has seen considerable investment, with some private firms experiencing rapid valuation increases. One AI company is now valued at approximately $500 billion, and another startup, Thinking Machines Lab, is seeking funds at a $50 billion valuation less than a year after its launch.

The surge in AI investments has led the S&P 500 to reach elevated valuation levels. Currently, it rests nearly two standard deviations above its long-term average, classifying it as one of the world’s most costly markets.

Upcoming Economic Indicators

Investors should brace for an eventful week with several corporate earnings reports and key economic data releases. Nvidia is set to announce earnings, a substantial event given its role as a barometer for AI sentiment. Additionally, retail giants Home Depot and Walmart will reveal their quarterly results, providing crucial insights into consumer spending.