MRKT Matrix Palantir's Plunge Brings The Market Down With It
Nov 4, 2025
Markets are shaken as Palantir's stock drop fuels AI valuation fears. Wall Street CEOs warn of a potential market correction, while valuation indicators hint at tough times ahead. Michael Burry's bearish bets against Palantir and NVIDIA stir controversy. Job postings continue to decline, indicating a cooling labor market, and IBM announces significant layoffs. Amidst this, Trump seeks to negotiate lower prices for weight-loss drugs, highlighting broader economic shifts.
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AI Stocks Trigger Broad Market Drop
- AI-linked stocks led a sharp sell-off as investors questioned lofty valuations despite strong earnings from some firms.
- Palantir plunged over 8% and the Nasdaq fell 2% amid profit-taking and valuation doubts.
Valuations Echo Late-1990s Bubble
- High-flying AI firms now trade at extreme multiples, with Palantir's forward P/E above 200 raising sustainability concerns.
- The Shiller P/E and sales multiples are near late-1990s bubble levels, implying weak expected future returns.
Narrow Leadership Raises Correction Risk
- Wall Street CEOs warned of an overdue 10–20% market correction after narrow, tech-driven gains.
- Market leadership concentrated in few AI names makes any pullback potentially painful.