Nasdaq Composite and S&P500: Tech Stocks Sink on AI Selloff and Weak Forecasts

Wall Street Slides on AI Stock Selloff and Weak Guidance from Key Names

U.S. stocks are trading lower Thursday, shortly after the opening, as traders reacted to a mixed batch of corporate earnings, light forward guidance from high-growth firms, and fresh data pointing to mounting labor market stress. A renewed selloff in AI-linked stocks and concerns about lofty valuations also pressured major indexes.

At 15:28 GMT, the Dow Jones was down 231 points, or 0.49%, while the S&P 500 shed 0.61% and the Nasdaq Composite dropped 1.07%, weighed by tech names. Investors also remained cautious over the potential for new U.S. tariffs and signs of an economic slowdown.

Are AI Valuation Concerns Driving the Tech Pullback?

The technology sector led Thursday’s decline, with the S&P 500’s tech component falling nearly 1%. AI-heavy names continued to come under pressure. Nvidia slipped again despite strong prior gains, and Qualcomm gave up more than 1% even after topping quarterly expectations. Traders focused on valuation risks as optimism around AI cooled.

Marvell Technology bucked the trend, rising over 1% on reports that Softbank may be exploring a takeover. However, the broader AI space saw renewed selling after a brief rebound earlier in the week.

What’s the Labor Market Telling Traders About Broader Economic Stress?

Job cuts surged in October, raising red flags about U.S. employment trends. According to Challenger, Gray & Christmas, layoffs totaled 153,074 last month—an increase of 183% from September and 175% higher than a year ago. That marks the worst October for layoffs in 22 years and makes 2025 the most job-cut-heavy year since 2009.

This spike in layoffs could signal future headwinds for consumer spending, adding to concerns about corporate earnings and margin pressure in the quarters ahead.

Which Companies Are Making the Biggest Moves on Earnings and Guidance?

Duolingo plunged 27% after issuing weaker-than-expected guidance. The company expects bookings between $329.5 million and $335.5 million this quarter, missing FactSet’s $344.3 million estimate. CEO Luis von Ahn said the firm is prioritizing user growth over immediate monetization, contributing to lighter EBITDA projections as well.

Other notable losers included DoorDash, down nearly 15%, and Paycom, which sank over 13%. On the upside, Datadog surged 22% on strong results, while Air Products climbed 10%.

How Will AI Valuations, Policy Risks, and Data Gaps Shape Market Direction?

Investor confidence in AI-driven equities is showing signs of strain. Despite strong earnings from several semiconductor and software firms, the pullback in names like Nvidia and Qualcomm reflects mounting skepticism about sustainability at current price levels. Traders are becoming more selective, shifting from thematic bets to earnings-driven plays as AI valuations push into stretched territory.

The broader environment adds further complexity. With the federal government shutdown entering a second month, key economic indicators remain offline. The absence of jobs, inflation, and GDP data limits visibility, forcing markets to rely more heavily on earnings, corporate guidance, and private surveys to assess economic health.

At the same time, the Supreme Court’s upcoming review of presidential tariff authority introduces a fresh source of headline risk. A ruling that curtails executive power on trade policy could delay or complicate future tariff decisions, especially in strategic sectors like semiconductors and green tech tied to global supply chains.

In the near term, tech leadership remains vulnerable, especially in high-growth segments with rich valuations. Traders should expect greater dispersion within sectors and heightened sensitivity to forward guidance as markets search for clarity on both economic direction and regulatory policy.

More Information in our Economic Calendar.