US stocks fell sharply on Tuesday as weakness in artificial intelligence-related shares dragged broader indexes lower, while investors weighed corporate earnings, commentary from Wall Street executives, and fresh signs of caution across technology and consumer sectors.
The S&P 500 declined 1.17%, the Nasdaq Composite dropped 2%, and the Dow Jones Industrial Average lost 251 points, or 0.5%.
Losses were concentrated in high-growth technology names that have led this year’s market rally, amid growing investor unease about elevated valuations.
AI stocks lead market decline
Shares of AI-linked companies retreated as concerns mounted over lofty valuations following months of sharp gains.
Palantir Technologies slumped 7%, even after reporting better-than-expected third-quarter earnings and issuing upbeat guidance driven by its artificial intelligence business.
Despite the strong results, the stock up more than 150% this year—trades at over 200 times forward earnings, prompting questions about sustainability.
Other prominent AI names also fell. Oracle slid 3%, trimming its nearly 50% year-to-date gain, while chipmaker AMD lost more than 3.7%.
Nvidia and Amazon shares weakened as well, extending a recent pullback in the sector.
AI-driven enthusiasm has pushed the S&P 500’s forward price-to-earnings ratio above 23, near its highest level since 2000, according to FactSet.
The elevated valuations have fueled fears that a correction may be due.
Adding to the caution, Goldman Sachs CEO David Solomon warned that a 10%–20% drawdown in equities could occur within the next year or two, while Morgan Stanley’s Ted Pick said investors should “welcome” market pullbacks as part of a healthy cycle.
Corporate movers: Papa John’s, Tesla, and Nvidia in focus
Beyond AI, several major companies made headlines. Papa John’s shares plunged 10% after Reuters reported that Apollo Global Management had withdrawn its offer to take the pizza chain private at $64 per share.
The stock’s decline marked its steepest single-day drop since March 2020.
Tesla fell 5.51% to $456.40 as investors assessed CEO Elon Musk’s proposed $1 trillion pay package ahead of a shareholder vote on November 6.
Norway’s $1.9 trillion sovereign wealth fund, one of Tesla’s largest shareholders, said it would oppose the plan, citing concerns about dilution and governance risk. The vote has divided major institutional investors and injected uncertainty into the stock’s near-term outlook.
Meanwhile, Nvidia shares slipped roughly 3.9% following news that investor Michael Burry, famed for predicting the 2008 housing crisis, had taken a $187 million bearish position against the company through put options.
Burry’s bet, combined with his similar stance on Palantir, underscores rising skepticism that the AI rally may have gone too far.
Uber Technologies reported strong third-quarter results, with revenue climbing 20% year-over-year to $13.47 billion and profit surging to $6.62 billion.
Trip volumes hit a record 3.5 billion, and monthly active users rose 17% to 189 million.
However, the stock fell 5% as the company’s fourth-quarter earnings guidance came in slightly below analyst expectations.
Uber forecast adjusted EBITDA between $2.41 billion and $2.51 billion, marginally missing consensus estimates.
CEO Dara Khosrowshahi said the company’s growth momentum remained strong, citing innovation, affordability, and expansion into local commerce as key drivers.
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