Tech stocks experienced heightened volatility this week, with the Nasdaq Composite—heavily weighted toward technology—posting its worst weekly performance since April, dropping over 3%. The selloff erased more than $800 billion (¥5.7 trillion) from the combined market value of eight major AI-linked companies, while the broader U.S. AI sector lost nearly $1 trillion. NVIDIA alone saw $350 billion vanish.

The downturn was triggered after Palantir, a government contractor and AI developer, reported earnings that fueled concerns about overvaluation. The stock’s sharp decline dragged down peers, with analysts warning of an "AI bubble" as massive capital expenditures increasingly rely on debt financing.

Adding to the sector’s woes, Meta faced backlash over reports that roughly $16 billion (10% of its 2024 revenue) came from fraudulent and prohibited ads, exposing systemic oversight failures. Internal documents revealed Meta’s platforms—Facebook, Instagram, and WhatsApp—served an estimated 15 billion scam ads daily, often from flagged but unbanned advertisers.

Among the hardest hit this week: - NVIDIA fell 7%, shedding $348.5 billion. - Microsoft dropped 4%, losing $150+ billion. - Oracle plunged nearly 8%, down $66 billion. - Palantir tumbled 11%, Broadcom 5%, and Meta 4%.

Lombard Odier’s Florian Ielpo likened the AI spending spree to "the dubious investments of the 2000 dot-com bubble." Big Tech’s Q3 capital expenditures hit $112 billion, funded partly by massive borrowing. JPMorgan noted retail investors—typically buyers during dips—stayed sidelined, cutting Palantir exposure after earnings.

Broader economic concerns compounded the selloff: - The University of Michigan’s November consumer sentiment hit a 3-year low. - Federal shutdowns obscured labor data, sparking fears of deterioration since September. - Chicago Fed’s hiring rate declined for a sixth straight month amid layoffs at Amazon, Paramount, and Target.

OpenAI CFO Sarah Friar’s remarks about potential U.S. government backing for its $500 billion valuation further rattled markets. CEO Sam Altman later downplayed the need for guarantees, projecting "multi-hundred-billion" revenue by 2030.

Analysts warn the tech rout could spill into other sectors if confidence falters, with upcoming earnings reports under intense scrutiny. Meta’s ad scandal—where internal estimates tied 1 in 3 U.S. scams to its platforms—highlights regulatory risks. The company called leaked documents "misleading," claiming proactive ad reviews reduced flagged violations.

Investors now question whether AI’s astronomical valuations can withstand tightening financial conditions and slowing consumer spending. Stephen Yiu of Blue Whale Capital, a NVIDIA bull, expressed concern over the "cash-burning models" of other tech giants, signaling broader unease about sustainability.