Stocks Sink as Investors Waver on AI

U.S. stocks slid early this week as fresh doubts about the AI boom rippled through Wall Street. Trading opened with broad declines across major indexes, pulling markets further from the record levels set just weeks ago. 

The S&P 500 was down 78 points (1.2%), at 6,594. The Dow Jones Industrial Average also slipped 1.2%, while the Nasdaq Composite, which is more exposed to large technology companies, fell 1.6%. Even with the downturn, all three benchmarks remain solidly higher for the year, with gains ranging from 8% to over 15%. 

Nvidia was the biggest weight on the broader market once again. The chipmaker, seen by many investors as the face of the AI boom, fell 3.2% in early trading. Its decline for November now sits near 11%, placing it in correction territory. The company is set to report quarterly earnings this week, and traders appear increasingly cautious ahead of the results. 

Nvidia’s sway over the market is unusually strong. Its massive valuation and the intense demand for its processors have allowed it, at times, to push the entire S&P 500 higher or lower almost by itself. The company briefly surpassed $5 trillion in market cap earlier this year. 

Since the S&P 500 plays a central role in many retirement accounts, swings in a single heavyweight stock can ripple through portfolios nationwide. 

Capital Economics chief markets economist, John Higgins, stated in a recent investors’ note that the surge tied to AI has had an outsized effect on the broader market. He estimated that without that excitement, the S&P 500 might be closer to 5,000. He added that investors are understandably focused on whether the momentum behind major AI players can continue. 

The current turbulence marks a sharp shift from the steady climb seen since April, when stocks rebounded after a sell-off that followed President Trump’s tariff announcement. Some analysts warned during that rally that prices were rising too quickly, especially among companies riding the enthusiasm for AI. 

A new Bank of America survey found that many professional investors still expect equities to recover. However, 45% identified a potential AI bubble as the biggest threat. Concerns are also growing that companies are spending too aggressively on data centers and chip infrastructure, raising the possibility that returns may fall short of expectations. 

Other speculative corners of the market have stumbled as well. Bitcoin briefly dipped below $90,000 after nearing $125,000 in October. Cloudflare dropped 3.1% following an outage that disrupted several online services, including ChatGPT. 

As long as tech firms like D-Wave Quantum Inc. (NYSE: QBTS) retain their strong underlying fundamentals, the movements in stock markets may not have any long term impact if these companies continue to deliver on their promises. 

NOTE TO INVESTORS: The latest news and updates relating to D-Wave Quantum Inc. (NYSE: QBTS) are available in the company’s newsroom at https://ibn.fm/QBTS 

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