Traders work at the New York Stock Exchange on Nov. 3 2025.
NYSE
Stocks fell Tuesday, pressured by declines in artificial intelligence-related names like Palantir as investors grow increasingly concerned about valuations in the bull market-leading shares.
The Dow Jones Industrial Average lost 410 points, or 0.9%. The S&P 500 dipped 1.2%, while the Nasdaq Composite lost 1.6%.
Palantir shares shed 6.8% even as the software company beat Wall Street’s estimates for the third quarter and gave strong guidance, fueled by growth in its artificial intelligence business. Palantir sees $1.33 billion in revenue for the current period, higher than the $1.19 billion expected by analysts, according to LSEG. Revenue in the prior quarter jumped 63%.
“Their results were good but markets were disappointed at the lack of company visibility for the whole of 2026,” wrote Deutsche Bank strategist Jim Reid. He also alluded to valuation concerns around Palantir.
Palantir, which was up 150% this year, trades at more than 200 times forward earnings, so investors in that name and the other AI stocks expect the companies to keep ratcheting up their profit and revenue guidance by a large magnitudes in order to justify continuing to buy the shares. Palantir’s current P/E heading into Tuesday’s trading was approaching 700.
Oracle, which sports a current P/E of 60 and forward P/E of 35, shed 3%, chipping away at its 50% gain this year. Chipmaker AMD, which has more than doubled this year and has a current P/E of 149, lost more than 4%. Other AI stocks such as Nvidia and Amazon fell as well.
AI stock gains have driven the S&P 500’s forward price-earnings ratio to above 23, near the highest levels since 2000, per FactSet.
Investors were also unnerved by comments from chief executives at Goldman Sachs and Morgan Stanley. Overnight, Goldman’s David Solomon said it’s “likely there’ll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months.” Morgan Stanley CEO Ted Pick also said: “We should also welcome the possibility that there would be drawdowns, 10 to 15% drawdowns that are not driven by some sort of macro cliff effect.”
Wall Street is coming off a mixed session. The S&P 500 and Nasdaq ended Monday higher, while the Dow fell more than 200 points. The S&P 500 through Monday was only about 1% away from a record having closed above 6,800 for the first time ever last month, a period where the major benchmark tacked on another 2% gain.
More than 300 stocks in the broad-market index closed in the red on Monday, adding to concerns about weak breadth and high levels of tech concentration — particularly after the number of S&P 500 stocks that gained last month was smaller than the amount that declined.
“Our biggest complaint about U.S. equities is the extremely disjointed state of breadth, whereby a handful of tech mega-caps have masked some significant red flags beneath the surface,” wrote Adam Crisafulli of Vital Knowledge in a note.
