AI Stocks Lose $820 Billion in One Week

The Nasdaq Composite fell 3% this week, its sharpest drop since early spring, as investors fled the year’s hottest trade — artificial intelligence. The S&P 500 lost 1.6%, snapping a three-week winning streak, while the Dow Jones slipped 1.3% despite late-session rebounds on shutdown optimism.

The declines were led by the AI leaders that powered much of 2025’s bull run.

Nvidia (NVDA) plunged 7%,
Oracle (ORCL) tumbled 8.8%,
AMD (AMD) dropped 8%, and
Meta (META) and Microsoft (MSFT) lost over 4% each.

In total, the AI-heavy megacap complex erased more than $820 billion in market value, according to estimates from NBC and CNN. Super Micro Computer (SMCI) — one of the top AI server providers — sank 23%, becoming the worst-performing S&P 500 stock of the week.

Even with the selloff, the Nasdaq and S&P 500 remain up double digits for the year, though the week underscored how fragile the AI rally has become.

Valuation Jitters and Bubble Talk

What started as profit-taking has now morphed into a broader debate: has the AI boom gone too far, too fast?

Analysts point to a string of “circular investments” — Nvidia funding AI startups like CoreWeave and xAI, which in turn buy Nvidia hardware — raising questions about whether the sector is propping up its own demand.
“There are concerns percolating under the surface with AI valuations,” said Scott Wren, senior strategist at Wells Fargo Investment Institute.

Hedge fund manager Michael Burry, famous for predicting the 2008 crash, revealed new short positions against Nvidia and Palantir, calling the sector dangerously overvalued.

Meanwhile, OpenAI’s CFO comments about potential government help for its massive $1.4 trillion infrastructure plan drew backlash, amplifying fears that the “build now, monetize later” model could test investor patience.

Even Nvidia CEO Jensen Huang added fuel to the volatility, warning that China could “win the AI race” if chip restrictions persist — remarks he later softened on X, saying “China is nanoseconds behind America in AI.”

Shutdown and Sentiment

The selloff coincided with growing frustration over the record 40-day US government shutdown, which has halted key economic data releases and dampened consumer sentiment.
The University of Michigan’s consumer survey showed confidence plunging to a three-year low, with many respondents citing the shutdown’s financial effects.

Private data painted an equally grim picture:

ADP reported just 42,000 jobs added last month,
Challenger, Gray & Christmas found October layoffs hit their highest since 2003, and
Several fast-food and retail chains flagged weaker spending among young consumers.

Without official labor or inflation data, investors have been relying on corporate earnings and private reports, heightening volatility.

Markets Eye Shutdown Deal

Despite the turmoil, stocks bounced off Friday’s lows after the Senate advanced a bipartisan deal to end the shutdown. The measure would fund the government through January 30, 2026, ensuring back pay for 1.4 million furloughed workers.

Futures rose early Monday, with the Nasdaq 100 up 1.3%, as investors bet the deal could bring back key data releases like CPI and PPI, which have been delayed since October.

Economists say the shutdown likely shaved several tenths off Q4 GDP, but a resolution could stabilize expectations heading into year-end.

What’s Next

The week ahead features a lighter calendar, but key events remain on deck:

Earnings from Disney, Cisco, CoreWeave, and Applied Materials will test whether corporate results can offset valuation fears.
The NFIB small-business optimism index and mortgage data are among the few economic indicators still scheduled, as federal agencies restart operations.

While analysts see potential for a short-term rebound if Washington fully reopens, the underlying question remains: can AI-driven growth keep up with trillion-dollar expectations?

After a year of record AI euphoria, Wall Street finally hit pause. The “AI bubble” talk is getting louder — and this week’s $820 billion wipeout may be the market’s way of saying: prove it.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.