Why US tech stocks are falling today, did Palantir just sound the alarm? Key points to know
US stock market crash today reason: The AI rally took a sharp hit on Tuesday as concerns over sky-high valuations rattled investors, sending tech stocks sliding across the board. The sell-off came after Palantir’s third-quarter earnings report, which showed strong results but still triggered a sharp drop in its stock, as per a report.
Palantir Stock Drops as Valuation Fears Hit Wall Street
Palantir reported $1.18 billion in revenue, topping Wall Street estimates of $1.09 billion and posting a 63% year-over-year surge, as per a Business Insider report. Despite the solid numbers and upbeat guidance, shares fell as much as 9% in early trading before trimming losses to about 7%, as per the report. Analysts pointed to Palantir’s lofty valuation, with a forward price-to-earnings ratio near 240x, as a major reason investors are taking profits, as per the Business Insider report.
ALSO READ: Salesforce, Oracle layoffs: Tech majors start sacking staff before holidays – here are the departments affected
Stock Market Down Today: Tech Giants Including Nvidia, AMD, and Oracle See Sell-Off
The broader tech sector followed suit. AMD slipped 1.7%, Nvidia fell 2.8%, and Oracle dropped 2.9%, while Microsoft, Salesforce, and IBM also traded lower, as per a Seeking Alpha report. Atlassian sank 5.7%, and monday.com fell 4.4%, underscoring growing caution in the software space, as per the report.
Even cybersecurity stocks weren’t spared, CrowdStrike, Palo Alto Networks, CyberArk, and Fortinet all posted losses, while Adobe was among the few exceptions, inching up 0.8%, as per the Seeking Alpha report.
ALSO READ: Why US market is down today? Key points investors need to take note as Dow, S&P 500 and Nasdaq fall
Wall Street Executives Warn of a Potential 20% Market Correction
Market jitters are growing as investors question whether AI-driven stocks have risen too far too fast, and if companies can truly deliver on their AI promises after pouring billions into the technology. Analysts at JPMorgan’s Market Intelligence desk noted that clients are increasingly worried about “narrow market breadth” and a “global risk-off tone,” as quoted by Business Insider.Adding to the unease, top Wall Street executives have warned of a potential correction. Morgan Stanley CEO Ted Pick and Goldman Sachs CEO David Solomon both said the market could face a pullback of up to 20%, though Pick added such a decline wouldn’t necessarily be negative, as per the report.
Trade Nation’s senior market analyst, David Morrison echoed investor fatigue, saying, “Some are doubting whether AI can possibly live up to the hype in terms of future returns,” as quoted by Business Insider.
ALSO READ: BTC crash alert: Why Bitcoin price dropped to $107,000 and why experts warn it could fall to $88,000
Michael Burry Bets Against AI Stocks
Meanwhile, legendary investor Michael Burry, known for “The Big Short,” has revealed new bets against Palantir and Nvidia, further pressuring the sector, as per the report.
Fed Uncertainty and Government Shutdown Deepen Market Caution
The timing of the drop is also sensitive, markets are grappling with uncertainty about Federal Reserve policy, after Fed Chair Jerome Powell said last week that more rate cuts are not guaranteed, as per the Business Insider report. With the ongoing US government shutdown delaying key economic data, traders are operating in a state of uncertainty.
AI Rally Faces a Reality Check
Despite the strong earnings season, sentiment in the tech sector appears to be shifting. After months of euphoria around artificial intelligence, Tuesday’s sell-off may mark the start of a reality check for investors betting big on the AI boom.
FAQs
Which US tech stocks saw the biggest losses today?
AMD, Nvidia, Oracle, Atlassian, and monday.com were among the biggest decliners.
Why did Palantir’s stock drop today?
Because investors were concerned about its extremely high valuation, even though the company reported strong revenue growth.