November saw significant sell-off in artificial intelligence (AI) stocks due to valuation fears, with Palantir, an AI-based software analytics provider, experiencing a 16% drop in stock values. Notably, the company’s stocks trade at 233 times forward earnings, contributing to investor concern. Other AI stocks including Nvidia, Microsoft and Amazon also fell by 12% and 5% respectively. Jefferies analysts recommended better risk-reward in Microsoft and Snowflake rather than in Palantir.
In other news, Wall Street is optimistic about December, historically one of the strongest months for stocks, potentially sparking a year-end rally. The Dow Jones Industrial Average and the S&P 500 ended November fractionally higher, while the Nasdaq Composite fell nearly 2%. Tech stocks suffered in November, with Nvidia dropping 13% and Coinbase falling 21%.
Meanwhile, a cooling issue disrupted trading in the U.S. stock index futures on the Chicago Mercantile Exchange. Despite the disruption, the major indexes are set to end November in red, with the Dow and S&P 500 set to snap six-month winning streaks and the Nasdaq set to see its first negative month in eight.
Retail stocks such as Macy’s, Walmart, and Best Buy saw some movement owing to Black Friday sales. However, the overall impact of Black Friday on retail stocks has lessened as more shoppers switch to online purchasing. Adobe Analytics estimated $8.9 billion in online sales on Black Friday, down from $9 billion last year.
In specific company news, SanDisk, a memory products manufacturer, saw more than a 4% rise in stocks ahead of joining the S&P 500. On the other hand, Airbus ordered a software change on more than 6,000 of its A320 jets due to potential data corruption caused by intense solar radiation.
Alphabet was an exception in tech market performance in November with a surge of more than 13% in shares, while Alibaba’s AI-powered smart glasses went on sale recently, competing against tech giants like Meta.
Overall, November witnessed a dip in AI and tech stocks, but Wall Street is hopeful for a better-performing December.
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