Nasdaq Slides 2.15% as AI Software Stocks Face Valuation Reversal

The Nasdaq Composite dropped 2.15% to close at 26,140, driven by a sharp reversal in artificial intelligence-related software stocks. The S&P 500 declined 1.07% to 7,661 during the session, while the Dow Jones Industrial Average slipped 0.34% to 52,002, securing its second consecutive weekly gain.

Sector performance reflected the broader tech weakness, with Energy leading the gainers and Communication Services pacing the decliners. Technology stocks also showed significant weakness across the board. In the fixed income market, the 10-Year Treasury yield declined to 5.10%, and gold prices rose 0.43% to $4,187.90 as of the U.S. market close.

Individual stock movements highlighted the divergence in investor sentiment. Alcoa shares jumped 5.80% following a third-quarter earnings beat, while Fox Factory shares plummeted 13.30% after the company announced an unplanned CEO departure and lowered its financial outlook. Ford gained 2% as investors rotated into defensive blue chip names.

The decline in AI valuations was particularly pronounced in specific high-growth names. Palantir Technologies entered correction territory amid the software valuation pullback. CoreWeave ended the week down 25%, with shares falling 11.91% on the day. This drop followed a note from Goldman Sachs stating that hedge funds sold AI stocks at the second-fastest pace in over a year. The firm described the selling as a short-term shift away from smaller AI companies like CoreWeave, with investors moving capital toward larger, more established AI firms or exiting the sector entirely.

Corporate news also impacted specific equities. Netflix named former Disney chair Peter Rice as its new chief content officer, yet the stock slid 3% on the announcement. Apple announced that preorders for its foldable $1,999 iPhone Duo sold out within minutes of becoming available. While the rapid sellout appears positive, some analysts and Apple experts suggest this may indicate a supply constraint rather than pure, unbridled demand for the next-generation device.