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Nasdaq set for worst week since April as AI nerves flare

<i>Zamek/VIEWpress/Corbis/Getty Images via CNN Newsource</i><br/>The tech-heavy Nasdaq Composite led markets lower and is set for its second-worst week this year.

By CNN Newsource

Published November 7, 2025 11:34 am

By John Towfighi, CNN

New York (CNN) — Tech stocks took a bruising this week as nerves persist about a potential artificial intelligence bubble.

The tech-heavy Nasdaq Composite was down 1.6% on Friday and on track for its worst week since early April, when President Donald Trump’s announcement of so-called reciprocal tariffs rocked markets.

The benchmark S&P 500 was down 1%. The blue-chip Dow was down 300 points, or 0.65%.

After a monthslong rally, skepticism is mounting about whether high-flying tech stocks will continue to produce superior returns. The sell-off in tech weighed on the broader market.

Wall Street’s fear gauge, the CBOE Volatility Index, jumped 16%, signaling relative fear in markets. CNN’s Fear and Greed index hovered in “extreme fear” and hit its lowest level since April.

Stocks have come under pressure this week as the CEOs of Goldman Sachs and Morgan Stanley voiced concerns about expensive valuations, while Wall Street’s bar for positive surprises on earnings results continues to rise after a monster rally in stocks in recent months.

“There are some concerns percolating under the surface with AI valuations,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute.

AI and tech stocks have driven the market’s bull run in recent years. As stocks rally, they can become relatively more expensive, creating an additional layer of consideration for investors. Meanwhile, there is increasing skepticism about whether the enormous amounts of money being spent on AI will be justified.

Nvidia shares (NVDA) fell 3% on Friday and were on pace for their worst week since April. Palantir shares (PLTR) fell 1.6% and were also on track for their worst week since April.

Oracle shares (ORCL), which soared 36% in one day in September after the company announced a deal with OpenAI, have nearly erased all of their gains since then. It’s emblematic of the renewed uncertainty about the AI wave.

Oracle shares are down 11% this week, on pace for their worst week in seven years.

Also contributing to jitters this week: OpenAI, the center of the AI boom, found itself in some hot water after top executives backtracked from earlier comments that suggested government help might be needed to pay for the roughly $1.4 trillion in chips and infrastructure it has announced.

“Nearly every major technology company in the US equity market has celebrated their entanglement with a company that lacks the resources to meet its obligations,” Mike O’Rourke, chief market strategist at JonesTrading, said in a note. “These companies have each invited a much greater degree of uncertainty into their financial forecasts.”

The S&P 500 on Friday dipped below its 50-day moving average, a key threshold. The index is down roughly 2.7% this week.

While concerns about tech are weighing on the market, the prolonged US government shutdown is also lingering in the background.

“The government shutdown creates further risk because the longer it continues, the more its impact will be felt on Main Street,” David Russell, global head of market strategy at TradeStation, said in a note.

Consumer sentiment also just hit its lowest level since June 2022, according to the University of Michigan’s latest survey. It’s a sign Americans are feeling increasingly worse about the economy and their personal finances, with many respondents citing the shutdown.

While volatility has picked up on Wall Street, a drawdown in the S&P 500 would present a buying opportunity for long-term investors, according to Wren at Wells Fargo Investment Institute.