Nasdaq Sinks Over 480 Points as the AI Trade Finally Blinks
The tech-heavy Nasdaq logged one of its sharpest setbacks in months on Tuesday, sliding by more than 480 points as investors finally balked at the lofty valuations powering 2025’s AI leaders. The drop came after weeks of increasingly narrow gains in which a handful of mega-cap names carried the broader market higher. Once those same stocks turned lower—led by Nvidia, Tesla, and other AI-adjacent names—the index had very little cushion, and the selloff broadened quickly. By the closing bell, the Nasdaq was down more than 2%, a move large enough to reawaken the debate over whether Wall Street has priced too much AI growth too soon.
Pressure was not limited to the Nasdaq. The S&P 500 fell around 1–1.2% and the Dow shed roughly 200–250 points, reflecting a session in which buyers simply stepped aside while the market repriced its tech darlings. Traders described it as classic profit-taking after an extended AI-led run: money did not flee the market indiscriminately, but it left the most expensive corners first. That matters because the “Magnificent Seven” and other AI beneficiaries now make up such a large slice of the major benchmarks that a coordinated pullback in those names almost guarantees index-level weakness.
What triggered the rethink was not a single disastrous headline but an accumulation of worries. Valuations on AI hardware, model infrastructure, and the biggest cloud platforms had crept back toward the upper end of their 2024–2025 ranges just as earnings guidance was becoming more selective. At the same time, hints of heavier capital expenditure in the sector—great for long-term AI buildout, less great for near-term margins—gave markets a reason to question whether earnings could keep pace with price. Once that doubt surfaced, the trade that worked all year suddenly looked crowded, and the path of least resistance was lower. ca.finance.yahoo.com+1
The timing also made stocks vulnerable. Global risk appetite had been softening for several sessions, and overnight markets in Asia sold off in sympathy once Wall Street’s tech wobble became clear. Strategists framed it as a “healthy correction” rather than panic—an unwind of concentrated AI and semiconductor bets after record highs, compounded by a firmer dollar and a bout of risk-off sentiment in crypto. That international follow-through is important: when U.S. tech stumbles and Asia echoes it, the feedback loop can keep volatility elevated for a few days even without fresh bad news. Reuters+1
Another layer to the story was the weakness in digital assets. Bitcoin slipped back below the $100,000 mark during the same risk-off window, reinforcing the sense that investors were trimming exposure across several high-beta trades at once. Correlation between big tech and crypto is far from perfect, but on days when markets decide to de-risk, the selling tends to cluster in the same growth and innovation pockets. Seeing stocks and crypto retreat together made the day’s move feel less like an idiosyncratic tech issue and more like a broader sentiment reset. ca.finance.yahoo.com
Even so, the tone from desks was measured, not alarmist. Yields did not spike violently, there was no fresh shock from the Federal Reserve, and credit markets held up—three conditions you would normally associate with a deeper, more durable equity drawdown. Instead, what Tuesday showed is that the market has reached the point where AI-linked names need new catalysts—stronger guidance, clearer monetization of models, or a macro tailwind—to justify the premium they command. If those catalysts arrive, buyers are likely to return quickly; if not, the path could shift from a single sharp drop to a slower valuation grind lower. SWI swissinfo.ch+1
Sources: Yahoo Finance video “Nasdaq falls more than 480 points as AI valuation worries grow”; Yahoo Finance market wrap on tech-led selloff; Bloomberg and Reuters coverage of the November 4–5, 2025 U.S. market pullback; Nasdaq and S&P 500 index data. Wall Street Journal+4Yahoo Finance+4ca.finance.yahoo.com+4