Nvidia stock falls 3% on Friday, extending weekly drop to nearly 10% as AI rally cools
The artificial intelligence boom hit a major speed bump on Friday as Nvidia stock (NASDAQ: NVDA) extended its brutal weekly losses.
The chipmaker fell 3% on Friday to $182.09, bringing its cumulative decline for the week to a staggering 9.35%.
For the world’s largest company by market capitalization, this represents a serious wake-up call for investors who have ridden the AI wave to record gains.
The selloff mirrors broader anxiety about whether sky-high valuations for AI stocks can actually be justified by future earnings.
Palantir Technologies has been getting hammered even harder, dropping over 12% for the week, while the Russell 2000 index of smaller stocks also tumbled 1.9%.
What started as a positioning-driven profit-taking event has morphed into something deeper, a genuine concern that the AI investment boom may have gotten ahead of itself.
Nvidia stock: The magnificent seven stumbles
Nvidia’s 3% Friday drop followed what was already a brutal Thursday session, where the stock fell 3.7%.
The losses come even as the company maintains strong fundamentals heading into its November 19 earnings report.
CEO Jensen Huang and CFO Colette Kress have been selling significant chunks of their own shares in recent days, adding to negative sentiment, though the insider selling alone didn’t trigger the decline.
The bigger issue is valuation exhaustion, with the stock trading at a price-to-earnings ratio of 52. Investors are questioning whether AI infrastructure spending can sustain the current hype machine.
Friday’s market also saw other mega-cap tech stocks crumble. Meta fell 1.7%, Amazon dropped 1.2%, and Microsoft ticked slightly lower.
Tesla, which had jumped on the $1 trillion compensation package approval for Elon Musk, ended the day down 4.2% in real terms.
The broader pattern is clear: the “Magnificent Seven” that had driven markets higher are now the pressure points dragging everything down.
The timing matters. Qualcomm’s surprisingly strong earnings report on Wednesday sparked questions about whether the semiconductor sector is overextended.
White House AI point person David Sacks also reignited concerns by saying there would be “no federal bailout” for AI companies, a statement that seemed to target OpenAI’s earlier comments about needing government support for chip infrastructure.
Combined with October’s disappointing jobs report showing 153,000 announced layoffs (the highest for that month in 22 years, much of it tied to AI cost-cutting), the narrative shifted from “AI will save everything” to “AI might be creating expensive infrastructure with unclear returns.”
Broader sell-off in AI space: The entire supply chain cracks
The pain isn’t limited to Nvidia. AMD crashed 7.3% on Thursday despite crushing earnings expectations and raising guidance.
Palantir has been absolutely obliterated, down nearly 12% for the week, even after beating revenue forecasts. Broadcom fell 2.3%, ARM tumbled 4.9%, and AppLovin dropped 4.5%.
This isn’t random stock-picking carnage; it’s a systematic repricing of the entire AI ecosystem.
Investors who loaded up on these names after months of relentless gains are heading for the exits.
Goldman Sachs and Morgan Stanley executives have warned of potential 20% market declines ahead, while prominent investor Michael Burry publicly stated he’s shorting both Nvidia and Palantir, framing the AI spending surge as a bubble waiting to burst.
The Nasdaq is tracking for its biggest weekly decline since April, down 2.8% for the week.
The question now isn’t whether AI is important; that’s settled. The question is whether investors paid too much too fast.
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