Tech Weekly: Tech Stocks Feel the Heat Amid Valuation Fears

This week's tech sector performance

The tech space was marked by heightened volatility this week, with sharp swings driven by concerns over inflated artificial intelligence (AI) valuations and mixed economic data.

Global markets gained early in the period, driven by optimism over a US-China trade truce, along with a US$38 billion AI cloud deal between OpenAI and Amazon (NASDAQ:AMZN).

However, gains were tempered following comments at the Global Financial Leaders' Investment Summit in Hong Kong, where Goldman Sachs (NYSE:GS) CEO David Solomon warned of a 10 to 20 percent pullback in equities within the next 12 to 24 months. Other panelists at the event offered similar projections.

US tech stocks sold off again on Wednesday (November 5) amid uncertainty over the Supreme Court’s tariff ruling and short positions by Michael Burry on NVIDIA (NASDAQ:NVDA) and Palantir Technologies (NASDAQ:PLTR).

A stronger-than-expected ADP report helped stabilize the tech sector midday, but October jobs data weighed on markets again on Thursday (November 6), cooling risk appetite, especially for AI momentum stocks.

Wall Street’s main indexes extended losses to a second session on Friday (November 7) and posted weekly declines as the Volatility Index (INDEXCBOE:VIX) hit its highest level in a fortnight, just a week after the S&P 500 (INDEXSP:.INX) and Nasdaq Composite (INDEXNASDAQ:.IXIC) notched their longest winning streaks in four and seven years, respectively.

Traders were pricing in a 70.2 percent chance of a 25 basis point interest rate cut from the US Federal Reserve in December at the time of this writing, down from 90 percent last week.

3 tech stocks moving markets this week

1. Palantir Technologies (NASDAQ:PLTR)

Palantir Technologies reported a strong Q3 earnings beat, reporting a year-on-year revenue increase of 63 percent to US$1.18 billion, exceeding analysts' expectations of US$1.09 billion.

Earnings per share were also above forecasts, coming in at US$0.21 compared to expectations of US$0.17.

The company’s total contract value rose to US$2.76 billion, a record high, driven by a 121 percent rise in US commercial revenue and a 52 percent increase in US government revenue. Palantir also raised its full-year 2025 revenue guidance to around US$4.4 billion, driven by continued strong AI demand and government contracts.

Management expressed confidence in continued growth fueled by AI, emphasizing strategic partnerships with companies like NVIDIA, while acknowledging challenges in the European market and operational scaling.

Despite the positivity, Palantir’s share price dropped about 3 percent in after-hours trading after the results came out. Analysts attributed the market's reaction to concerns that the prolonged US government shutdown could impact contracts, alongside a large bearish bet revealed by Burry’s fund.

The company’s share price is down 14 percent for the week.

2. Amazon (NASDAQ:AMZN)

Shares of Amazon rallied on Monday (November 3) morning after the company announced a US$38 billion multi-year partnership with OpenAI to run its advanced AI workloads on Amazon Web Services (AWS) infrastructure, providing access to hundreds of thousands of NVIDIA GPUs and specialized AWS chips.

The deal significantly strengthens AWS’ position in the AI cloud market.

Investors had a marked reaction to the news, driving Amazon shares to a record US$254. Gains were partially erased during the broader tech sector pullback, and Amazon ultimately closed the week down 4.28 percent.

3. NVIDIA (NASDAQ:NVDA)

Shares of AI sector bellwether NVIDIA have been dragged down this week due to valuation concerns, as well as fears related to US export restrictions on advanced AI chips to China.

During a Sunday (November 2) 60 Minutes interview that covered a range of topics, US President Donald Trump said that NVIDIA's most advanced AI chips will be reserved exclusively for US companies.

The next day, Microsoft provided an update on its US$15.2 billion planned investment in the United Arab Emirates (UAE). Its plans include increasing its AI computing power in the UAE by four times to reach the equivalent of 60,400 NVIDIA A100 GPUs in compute power in the country. NVIDIA shares, also boosted by Loop Capital raising its price target by US$100, rose by over 4 percent from their October 31 closing price in early trading.

However, a large bearish position against NVIDIA was disclosed from Burry’s fund on Wednesday, adding to downward pressure on NVIDIA. During a Thursday press conference, White House Press Secretary Karoline Leavitt told reporters that Trump is “not interested in selling (the Blackwell chip) to China at this time."

Meanwhile, during the Financial Times’ Future of AI Summit, NVIDIA CEO Jensen Huang said the west is being held back by “cynicism," telling the outlet, “China is going to win the AI race.”

Huang has previously warned that US restrictions could backfire by accelerating China’s domestic chip development, arguing the US should stay engaged with Chinese developers to maintain leadership.

The company's shares are down 9.53 percent for the week.

Top tech news of the week

• Apple (NASDAQ:AAPL) is reportedly developing a budget laptop, code named J700, to compete with Chromebooks and entry-level Windows PCs. The low-cost Mac, for web browsing, document work and light media editing, is in active testing with a launch planned in H1 2026. The company is reportedly also nearing a deal with Alphabet (NASDAQ:GOOGL) to power a major overhaul of its Siri voice assistant.

• Xanadu Quantum Technologies, a Toronto-based company, is one of three Canadian firms — and 11 companies total, including IBM (NYSE:IBM) — chosen to advance to the second stage of a program run by the US military's research and development arm, the Defense Advanced Research Projects Agency. The program aims to determine the practical scalability of quantum computers within the next decade. This news follows Xanadu's announcement on Monday that it plans to go public via a merger with a special purpose acquisition company, Crane Harbor Acquisition (NASDAQ:CHAC).

• Arm Holdings (NASDAQ:ARM), Qualcomm (NASDAQ:QCOM), Super Micro Computer (NASDAQ:SMCI) and Advanced Micro Devices (AMD) (NASDAQ:AMD) all reported strong quarterly earnings, with revenue and profit beats driven by robust demand in the AI, cloud computing and semiconductor sectors. Arm posted record licensing revenue, while Qualcomm exceeded expectations with solid 5G chip sales. For its part, Super Micro saw growth from data center customers, and AMD's revenue was boosted by AI chip sales. Despite the positive results, market reactions were mixed: investors cheered strong fundamentals, but pulled back amid worries over valuations and broader tech sector volatility, causing some share price declines or muted gains across these stocks.

Tech ETF performance

Tech exchange-traded funds (ETFs) track baskets of major tech stocks, meaning their performance helps investors gauge the overall performance of the niches they cover.

This week, the iShares Semiconductor ETF (NASDAQ:SOXX) declined by 4.81 percent, while the Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) saw a weekly loss of 5.2 percent.

The VanEck Semiconductor ETF (NASDAQ:SMH) decreased by 5.41 percent.

Tech news to watch next week

Next week, investors will get earnings results from Cisco Systems (NASDAQ:CSCO), due to report on November 12. The company is expected to deliver a year-on-year increase in earnings on higher revenues. Semiconductor equipment supplier Applied Materials (NASDAQ:AMAT) is set to report its quarterly earnings on November 13.

AMD will have its Financial Analyst Day on November 11, providing further strategic updates and outlook.

Investors will also be watching for any sign of an end to the 38 day US government shutdown after Senate Minority Leader Chuck Schumer (D-NY) unveiled a plan to attach a one year extension to expiring Obamacare subsidies, and to create a bipartisan committee that could negotiate further on how to deal with the subsidies after the government reopens. Majority leader John Thune reportedly told CBS News that the proposal is a "nonstarter."