The S&P 500 fell 1.66 percent and the Nasdaq Composite dropped 2.29 percent on Thursday, a concentrated pullback that produced North America’s worst single-day declines since October 10. The Dow Jones Industrial Average plunged 797.60 points, Wealth Professional reported, citing market data compiled that day, while the S&P/TSX Composite closed down 573.94 points. Technology now makes up a record 35.8 percent of the S&P 500, Yahoo Finance reported, leaving broad-market funds and retirement accounts heavily exposed to losses. The immediate casualties were momentum-heavy portfolios and index-weighted holdings, and the sell-off forced investors to reassess whether the AI rally has outpaced fundamentals.
The immediate read is simple. Concentration in a handful of AI and chip names turned a routine wobble into a broad retreat, and that matters because so much of the market sits behind those leaders.
Where the pain hit
The rout landed hardest on the AI leaders and their suppliers. Business Insider’s coverage of the week showed Nvidia pared earlier declines but had been down as much as 3.5 percent on Tuesday before recovering. Business Insider’s tally listed Nvidia down 1.08 percent, Palantir down 8.35 percent, AMD down 2.42 percent, Broadcom down 1.85 percent and Meta down 1.89 percent on the most acute day of selling.
Other chip and AI-adjacent names fared poorly as well. Micron sank roughly 4 percent, Amazon and Apple each fell nearly 2 percent, and CoreWeave, an AI data-center operator, lost more than 20 percent over five trading sessions, Yahoo Finance and other market coverage showed. That pattern turned what might have been isolated declines into a market-wide event because of index weights and momentum strategies.
Retail and institutional investors were the immediate casualties, the brief confirmed. Momentum-heavy portfolios and index-weighted funds amplified losses. With technology accounting for a record 35.8 percent of the S&P 500, Yahoo Finance noted broad-market funds and retirement accounts had become disproportionately exposed to moves in a narrow roster of stocks.
Why investors sold, and where they looked next
Several distinct forces converged to produce the rout. Valuation anxiety topped the list after a three-year, momentum-driven advance in AI-linked stocks. Michael Burry reappeared on social media and posted, "Sometimes, we see bubbles," Business Insider reported. A regulatory filing showed his firm, Scion Asset Management, had taken short positions against both Palantir and Nvidia in the latest quarter.
Ed Yardeni, president of Yardeni Research, said some investors likely used Burry’s filing as a trigger to take profits.
Public warnings from senior bankers amplified the mood. Goldman Sachs CEO David Solomon warned at a public forum that the market could face a 10 to 20 percent drawdown in the next 12 to 24 months, and Morgan Stanley CEO Ted Pick said 10 to 15 percent corrections are a healthy feature of markets, Business Insider reported. Those comments moved the debate from stock-specific risk to market-wide positioning.
Skepticism about AI’s near-term payoff also intensified selling. Researchers with MIT’s Project NANDA found that 95 percent of companies in their study were not yet getting a return on AI investments, Yahoo Finance reported. OpenAI CEO Sam Altman publicly cautioned that the market could be in a bubble, saying investors may be "overexcited about AI," according to Yahoo Finance. At the same time, the case for ongoing demand isn't absent. Yahoo Finance noted major cloud providers planned heavy capital spending to expand AI infrastructure, citing an estimated nearly $700 billion in planned outlays for the year, a figure commentators used to argue compute demand hasn't evaporated.
The speed and breadth of the rotation prompted suggestions of safer havens. Yahoo Finance highlighted energy stocks and large-cap dividend payers as options for investors seeking less volatile exposures. Energy constitutes only 2.7 percent of the S&P 500 but about 15.4 percent of the S&P/TSX Composite, creating a structural divergence between US and Canadian sector profiles that some analysts said could influence cross-border flows.
The sell-off pushed volatility back into markets after months in which gains were concentrated in a handful of AI leaders. North American benchmarks recorded their worst single-day declines since October 10, and the shock ricocheted across asset classes because those leaders had become a market unto themselves, the reporting showed. Wealth Professional recorded the S&P and Dow moves, while Yahoo Finance and Business Insider provided the sector and company-level detail that mapped how the selling flowed through both US and Canadian markets.
So what changed? Nothing fundamental broke this week, but a cluster of warnings, profit-taking and the realisation that a tiny group of stocks carries a huge share of market returns was enough to trigger a broader correction. For investors, the practical question isn't whether the AI story endures, but whether portfolios are positioned for a more volatile path back to equilibrium.
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Technology’s record 35.8 percent share of the S&P 500 underlines the risk: concentrated gains in a few AI leaders can translate into broad losses for index investors and retirement accounts.
This article was created with AI assistance.
