US open: Tech sector under pressure again as stocks fall
By Michele Maatouk
Date: Friday 07 Nov 2025
(Sharecast News) - US stocks fell in early trade on Friday, with the tech sector under pressure again amid concerns about stretched valuations, as broader concerns about economic growth also weighed on sentiment.
At 1520 GMT, the Dow Jones Industrial Average was down 0.2% and the S&P 500 was 0.6% lower, while the tech-heavy Nasdaq was 1.1% lower.
David Morrison, senior market analyst at Trade Nation, pointed out it's been a bad week for Nvidia and Palantir, down around 12% and 22% respectively from highs hit on Monday.
"Both stocks have soared over the past few years," he said. "Nvidia has gained 276% since the beginning of 2024, while Palantir has surged a stunning 912% over the same period, even when taking into account this week's losses.
"So overall, investors have little to complain about. But that's not the point. Market participants aren't used to seeing companies with such close involvement in AI selling off like this. It's one thing for equity markets to suffer a general pullback, as happened during the Trump Tariff Tantrum in April. But it's quite another to see stocks at the vanguard of AI development getting trashed. What adds to concerns is that there has been no obvious catalyst for the selloff.
"Having noted that, some analysts point to this week's disclosure that Michael Burry, a big winner during the Great Financial Crisis of 2008/9, has large short positions on both Nvidia and Palantir. The risk-off move is no longer focused on these two giants. Japan's giant tech investment bank, SoftBank, lost 20% over the past week. SoftBank has pledged a $40 billion investment in OpenAI, the world's largest private company by market capitalisation, and owner of ChatGPT.
"The broader semiconductor sector has also come under pressure. This week, Advanced Micro Devices and Qualcomm released strong quarterly updates, as did Palantir. Yet all got hammered as investors rushed to book profits."
Meanwhile, with the longest US government shutdown in history stretching into its sixth week, the release of the latest non-farm payrolls report was delayed for the second month in a row.
However, a survey from the University of Michigan showed a dip in sentiment. The index of consumer sentiment nudged down to 50.3 in November from 53.6 the month before and 71.8 in November 2024.
Surveys of consumers director Joanne Hsu said: "With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy.
"This month's decline in sentiment was widespread throughout the population, seen across age, income, and political affiliation. One key exception: consumers with the largest tercile of stock holdings posted a notable 11% increase in sentiment, supported by continued strength in stock markets."
In equity markets, Nvidia was in the red again. Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted the stock is on track for a rough week, down more than 10% as "lingering AI bubble chatter meets a reality check on China".
"For those still clinging to hopes of a rebound in that market, this week feels like the moment of acceptance. Yet even without China, Nvidia's growth story remains compelling - CEO Jensen Huang recently flagged $500 billion in orders already booked for 2025-26.
"That kind of demand and backlog speaks to the scale of AI infrastructure buildout, which shows no signs of slowing despite the background noise. The world's leading tech CEOs are united on one mission: winning in AI - and Nvidia is still at the centre of that race."
Elsewhere, Tesla slumped after the EV maker's shareholders voted to approved a controversial $1trn pay package for founder Elon Musk following months of debate and scrutiny. Some 75% of the votes cast at Thursday's annual general meeting in Austin backed the largest corporate pay package in history.
Under the deal, Musk has been set a series of stretching goals for the next decade, including delivering 20m vehicles, having 1m robot taxis in operation, selling 1m robots and Tesla earning as much as $400bn in core profit.
Kathleen Brooks, research director at XTB, said: "The bigger driver of Tesla's share price in the short term is valuation concerns since it has a forward P/E ratio of 216 times earnings, which leaves the stock vulnerable to a further sell off."
Opendoor Technologies and Constellation Energy both fell heavily after they reported quarterly earnings that missed expectations, with Constellation also narrowing its guidance for full-year operating earnings.
On the upside, Peloton Interactive surged after quarterly numbers from the US fitness brand beat expectations.
The firm posted a 6% decline in first-quarter revenues, to $550.8m, but this was ahead of consensus expectations of $539.8m. The group also lifted guidance for full-year earnings by $25m, to between $425m and $475m.
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