Remember when everyone was convinced AI stocks could only go up? Yeah, about that…
The stock market just served up a reality sandwich this week, with major indexes heading for their worst performance since April. The Nasdaq 100 got absolutely demolished, dropping over 5% in five days. That’s the kind of week that makes you question whether your portfolio app is broken or if you really did lose that much money.
The Carnage Report
Let’s talk numbers, because misery loves company. The S&P 500 dropped 1.07% on Friday alone, the Dow fell 0.72%, and the Nasdaq composite was down 1.7%. But the real bloodbath was in tech stocks:
- Palantir: down 15.72% (ouch)
- Nvidia: down 12.5% (double ouch)
- AMD: down 12.04% (triple ouch)
- Broadcom: down 8.18%
- Meta: down 7.43%
If you’re wondering what happened to your “can’t lose” AI plays, well… they lost.
The Valuation Reality Check
Here’s the thing nobody wanted to talk about during the AI euphoria: some of these stocks got ridiculously expensive. Palantir was trading at a forward P/E ratio of 187. For context, that’s like paying $187 for a sandwich because someone told you it might taste really good someday.
Even the big shots started getting nervous. Goldman Sachs and Morgan Stanley CEOs both warned about a potential correction this week. When Wall Street’s own cheerleaders start pumping the brakes, you know something’s up.
The Silver Lining (Sort Of)
But here’s where it gets interesting. While everyone’s panicking about tech valuations, some smart money is already talking about buying the dip. JPMorgan said they’d be “dip-buyers” through the end of the year, betting that strong economic growth and corporate earnings will eventually win out.
Plus, there’s a weird upside to all the doom and gloom: weaker job data (October had the worst layoffs in 22 years) is making Fed rate cuts more likely. The market now sees a 70% chance of another rate cut in December. Lower rates = cheaper money = potentially higher stock prices. It’s like getting a discount on your discount.
The Level to Watch
Technical analysts are eyeing 6,665 on the S&P 500 – that’s the 50-day moving average. If we break below that, things could get spicier, with some predicting a drop to 6,500. But others think we could bounce back as early as next week.
The Bottom Line
Look, nobody likes seeing red in their portfolio, but this kind of volatility is normal in a market that’s been on a tear. The AI revolution isn’t over just because some stocks got ahead of themselves. Sometimes the market needs a timeout to remember that even revolutionary companies need to justify their price tags.
Whether this is a buying opportunity or the start of something bigger remains to be seen. But hey, at least we’re all losing money together, right?