Tech Selloff: AI Stocks Slide, But Market Experts Urge Caution, Not Panic

Gerik

Summary:

AI-related stocks including Nvidia and Palantir are experiencing sharp losses, sparking concern about valuations. However, analysts describe the pullback as a natural bout of profit-taking rather than a full-blown panic or a loss of faith in AI's long-term potential....

Market Overview

On Wednesday, global markets extended their retreat from recent highs, with particular pressure on AI and semiconductor stocks. Nasdaq futures slipped 0.2%, following a 2% drop in the main index on Tuesday. In Asia, markets in Tokyo and Seoul fell around 5% from recent peaks, led by declines in major chip and tech-related names.

The steepest losses were seen in companies that had surged during the AI rally. Nvidia, now the world’s most valuable firm, saw a 4% drop on Tuesday and is down about 7% from its recent peak. Palantir Technologies also suffered an 8% plunge after strong earnings were met with skepticism, followed by an additional 3% dip in after-hours trading. Korean chipmaker SK Hynix fell 6% over two days after a routine caution from the local exchange board triggered broader investor hesitation.

Investor Sentiment and Commentary

Despite the broad selloff, analysts maintain that the correction is healthy and driven largely by technical factors and short-term profit-taking.Jon Withaar of Pictet Asset Management emphasized that the pullback lacks a single fundamental trigger and appears “positioning-driven,” with investors trimming exposure to recent outperformers. Angus McGeoch from Barrenjoey echoed this, describing it as “blanket selling” in high-risk segments but not a signal of deeper structural concern.Fund managers are reportedly locking in gains for the year but remain ready to re-enter positions if market sentiment improves, especially with a historically strong performance in tech throughout 2025.

Comments from Wall Street leaders Ted Pick (Morgan Stanley) and David Solomon (Goldman Sachs) added to caution, warning of potential market “drawdowns” ahead. Their remarks, coupled with Wednesday’s U.S. Supreme Court tariff hearing, may have fueled additional profit-taking.

The current market action is being viewed by many professionals as a “wobble” rather than the start of a crisis. Charu Chanana of Saxo Markets considers this type of position unwind a necessary adjustment rather than a collapse in AI optimism. Similarly, Wilson Asset Management’s Matthew Haupt disclosed that he has been buying into the dip, anticipating a rebound once near-term uncertainty clears.

While sharp drops in AI leaders like Nvidia and Palantir have jolted markets, there is broad consensus among institutional investors that this is not the bursting of a bubble. Instead, it reflects cautious rebalancing and end-of-year positioning. The AI narrative remains intact for the long term, with volatility offering entry points for those who remain bullish on the sector’s transformative potential.

Source: Reuters

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