The US key index, the S&P 500, is on track to post its worst November performance in 17 years, as the AI-led rally that powered Wall Street to multiple record highs in recent months has fizzled out amid growing concerns over its sustainability.
Investors have responded by continuing to sell shares of technology companies, particularly those in the artificial intelligence space, even as Nvidia reported better-than-expected Q3 numbers along with upbeat guidance.
The selling pressure comes amid fears in Silicon Valley and beyond of a potential bubble, as the value of AI tech companies has soared in recent months and companies have invested heavily in the burgeoning industry, though the results of these investments have so far been limited.
Wall Street darling and the world’s most valued company, Nvidia Corp, has seen its stock price decline sharply from recent highs, losing 11% of its value in November so far. This puts it on track for its biggest monthly drop since March 2025, despite the company’s strong numbers in September quarter.
Yet, Nvidia’s stock remains up 34.51% for the year, and earlier this month, its market capitalization breached $5 trillion, making it the first company to achieve this milestone.
Other chip stocks have also suffered, with Advanced Micro Devices’ shares falling 20% in November and Oracle tumbling by 23.30%
The retreat from artificial intelligence, related stocks has spread across global markets. TSMC and ASML have declined sharply from recent highs, and SoftBank Group, active across AI infrastructure, semiconductors, and application companies, has fallen 36% from its recent peaks.
S&P 500 faces worst November since 2008
As once high-flying stocks cooled off, the S&P 500 index plummeted 4.4% in November so far, and if the weak momentum continues toward month-end, it will mark its worst November performance since 2008, when it tumbled 7.48%. Similarly, the tech-heavy Nasdaq has fallen sharply by 7% so far, while the Dow Jones Industrial Average has also sunk 4%.
This broad weakness has put the three main U.S. indexes on pace for their worst week since April, when President Trump’s tariff war roiled markets, reflecting a combination of sector-specific fears and macroeconomic concerns.
Global chip stocks, including TSMC and ASML, sold off as well, weighing on major indices in Asia. Benchmarks in China, Japan, and South Korea lost more than 2% in the current month, indicating that the AI-related sell-off is not confined to the US markets.
| Year | November Change |
|---|---|
| 2008 | -7.48% |
| 2009 | 5.74% |
| 2010 | -0.23% |
| 2011 | -0.51% |
| 2012 | 0.28% |
| 2013 | 2.80% |
| 2014 | 2.45% |
| 2015 | 0.05% |
| 2016 | 3.42% |
| 2017 | 2.81% |
| 2018 | 1.79% |
| 2019 | 3.40% |
| 2020 | 10.75% |
| 2021 | -0.83% |
| 2022 | 5.38% |
| 2023 | 8.92% |
| 2024 | 5.73% |
| 2025 | -4.4% so far |
SoftBank Group, active across AI infrastructure, semiconductors, and application companies, has fallen 30% from its recent peaks.
Fears of a dot-com-style AI bubble
The sustained rally in AI-related stocks has also raised fears that stock markets could be heading for a repeat of the dot-com boom and bust of the late 1990s. During that period, the values of early internet companies surged amid a wave of optimism for what was then a new technology, before the bubble burst in early 2000, causing many share prices to collapse.
This collapse led to some companies going bust, resulting in significant job losses. A drop in share prices can also impact the value of people’s savings, including pension funds.
Goldman Sachs CEO David Solomon has warned of a “likely” 10–20% drawdown in equity markets at some point within the next two years, while both the International Monetary Fund and the Bank of England have raised alarm bells.
Bank of England Governor Andrew Bailey highlighted the possibility of an AI bubble in an interview with CNBC on November 7, noting that the “very positive productivity contribution” from technology companies could be offset by uncertainty around future earnings in the sector.
JPMorgan CEO Jamie Dimon also expressed concerns over the risk of an artificial intelligence bubble impacting global equity markets. In an interview with BBC on October 9, he said he is “far more worried than others” about a serious market correction, which he suggested could occur in the next six months to two years.
Fading US Fed rate-cut hopes heighten AI valuation risks
One of the factors behind the AI sell-off is renewed investor caution over interest rate expectations. The possibility of a US Federal Reserve rate cut in December has dimmed after the delayed nonfarm payrolls report, released Thursday, showed that nonfarm payrolls increased by 119,000 in September—more than double the estimated 50,000—while the unemployment rate rose to 4.4%, the highest in four years.
Following the data, fed funds futures indicated less than 40% odds of a third rate cut this year, a negative outcome for investors betting on lower interest rates. Fed Governor Michael Barr also noted that the central bank must proceed cautiously with additional cuts as inflation remains above target.
This was the final labor market report ahead of the December FOMC meeting, reinforcing expectations that the Fed will maintain its current policy stance amid economic uncertainty, further exacerbated by the US government shutdown.
Minutes from the Fed’s October meeting, released Wednesday, showed that policymakers cut interest rates even as they warned that further easing could risk entrenched inflation and undermine public trust in the U.S. central bank.
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