Wall Street's AI Selloff Isn't Over Yet: Four Signals Say the US Market Hasn't Bottomed

Wall Street's AI-led selloff is not over yet — and analysts say it is too soon to call the bottom. The Nasdaq-100 is about 10 percent below its early-October record, and four gauges that strategists watch closely suggest the worst may not be over, even as some see the rout as a buying opportunity.

This is a follow-up to our US stock market update from Tuesday, when hot October inflation data and a jump in rate-hike expectations sent the Nasdaq down 0.7 percent and Nvidia down 5.5 percent. The selling has continued since, and the question now is whether the market has found its floor — or whether there is further to fall.

Four signals to watch

The first gauge is tech positioning. Deutsche Bank's data shows that investors' holdings in technology stocks have fallen below the lows seen during the April 2025 "Liberation Day" selloff — a sign that the rush out of tech has been aggressive, and that there may be less selling left to come, or that the damage is already deep.

The second is stock correlation. Barclays notes that the correlation between individual stocks has fallen to a record low, which means shares are moving on their own news rather than together — a sign of a market that is picking winners and losers rather than selling everything at once.

The third is options demand. The market for put options — bets that stocks will fall — has been mixed, suggesting that investors are hedging rather than panicking. And the fourth is the technical charts: Fundstrat's Mark Newton says the market could stay volatile for a couple more weeks before it finds a bottom.

The CoreWeave warning

One of the sharpest warnings came from CoreWeave, the AI infrastructure company, whose shares plunged after its results. The company is a bellwether for AI spending: if the firms that rent out AI computing power are struggling, it suggests the AI buildout may be slowing — or at least that investors are no longer willing to pay any price for it.

The midterms are another catalyst. With US midterm elections approaching, political uncertainty is adding to the market's nerves, and the outcome could shift the outlook for regulation, spending and interest rates.

Why it matters

The AI trade has been the engine of the stock market for three years, and its reversal is the biggest test of that engine so far. The four signals do not agree with each other — positioning says the selling may be nearly done, correlation says the market is being selective, options say investors are hedging, and the charts say volatility will continue. That disagreement is itself the point: nobody knows where the bottom is, and the analysts who claim to are guessing. For investors, the honest answer is that the market has not yet given a clear signal — and the next few weeks, through the midterms and into Nvidia's earnings on 17 November, will decide whether this is a correction or something worse. Our report on Anthropic's $1 trillion IPO plans covers the other side of the AI story — the private market's confidence in AI, even as the public market wavers.

Sources

• Reuters — After US market shake-out, signs suggest too soon to say worst is over
• Kitco — After US market shake-out, signs suggest too soon to say worst is over