Traders at work at the New York Stock Exchange on November 3, 2025.
new york stock exchange
Stocks fell on Tuesday, weighed down by declines in artificial intelligence stocks such as Palantir, as investors grew increasingly concerned about the valuations of bull market-leading stocks.
of S&P500 Although it fell by 0.6%, Nasdaq Composite It decreased by 0.9%. of Dow Jones Industrial Average You lost 95 points, or 0.1%.
Palantir Shares fell 7% even as the software company beat Wall Street expectations for the third quarter and provided strong guidance driven by growth in its artificial intelligence business. Palantir is expected to have revenue of $1.33 billion for the current fiscal year, beating analysts’ expectations of $1.19 billion, according to LSEG. Last quarter’s revenue increased 63%.
“While the financial results were strong, the market was disappointed by the company’s lack of visibility throughout 2026,” said Jim Reed, a strategist at Deutsche Bank. He also cited valuation concerns surrounding Palantir.
Palantir is up 150% this year and trades at a forward P/E of more than 200 times, so investors in this name and other AI stocks expect the company to continue to significantly raise its earnings and revenue outlook to justify continuing to buy the stock. Palantir’s current P/E ratio heading into Tuesday’s trading was nearing 700.
oracleThe current P/E ratio is 60 and the forward P/E ratio is 35, which is down more than 1% and the 50% gain this year has been gradually erased. Chipmaker AMD, which has more than doubled this year and currently has a P/E of 149, has fallen more than 4%. Other AI-related stocks Nvidia It also fell.
The rise in AI stocks has pushed the S&P 500’s forward price-earnings ratio to more than 23 times, near its highest level since 2000, according to FactSet.
Investors were also spooked by comments from the chief executives of Goldman Sachs and Morgan Stanley. Overnight, Goldman’s David Solomon said, “We are likely to see a 10% to 20% drawdown in the stock market over the next 12 to 24 months.” Morgan Stanley CEO Ted Pick also said, “We should also welcome the possibility of a drawdown that is not due to some kind of macro cliff effect, a drawdown of 10% to 15%.”
Wall Street is emerging from a mixed session. The S&P 500 and Nasdaq ended Monday higher, but the Dow fell more than 200 points. Through Monday, the S&P 500 index was just about 1% off its record of closing above 6,800 for the first time in history last month, with the major index posting an additional 2% gain.
More than 300 stocks in the broad-market index closed in the red on Monday, raising concerns about weak breadth and high tech concentration, especially after the number of S&P 500 stocks that rose last month was smaller than the declines.
“The biggest complaint about U.S. stocks is that they are extremely disparate, with a small number of tech mega-cap stocks hiding serious red flags behind the scenes,” Vital Knowledge’s Adam Crisafulli said in a note.
