Nasdaq Suffers Worst Week Since April as AI Stocks Slide and Shutdown Worries Grow

Tech stocks tumbled this week, pushing the Nasdaq Composite to its worst performance since April, as investors grew increasingly wary of inflated artificial intelligence valuations and the prolonged U.S. government shutdown.

The Nasdaq fell 3.04% for the week, closing down 0.21% Friday after a volatile trading session. The S&P 500 slipped 1.63% for the week, while the Dow managed a modest 0.16% gain. The declines come as traders questioned whether the recent AI-driven rally can continue to deliver strong returns.

High-profile AI names led the downturn, with Nvidia dropping 7.1% and Palantir sliding 11.2%—their sharpest weekly losses since April. Oracle shares also sank nearly 9%, wiping out gains made earlier this year. Analysts pointed to “stretched sentiment and profit-taking” across the tech sector after months of aggressive buying.

Adding to the market jitters, OpenAI’s leadership walked back earlier statements about government funding support for its massive chip investments, fueling doubts about the long-term sustainability of AI spending.

Meanwhile, the government shutdown—now the longest in U.S. history—added more uncertainty. Economists warned that prolonged disruptions could hurt consumer confidence and business operations nationwide.

“The government shutdown creates further risk because the longer it continues, the more its impact will be felt on Main Street,” said David Russell, global head of market strategy at TradeStation.

Investors briefly found optimism late Friday after Senate Minority Leader Chuck Schumer announced Democrats had proposed a deal to reopen the government. While Republicans are not expected to accept the offer, markets rallied slightly on hopes of progress.

Despite the turbulence, some strategists see a potential buying opportunity if stocks continue to dip. “We believe we are approaching the end of the longest government shutdown of all time,” said Larry Adam, chief investment officer at Raymond James. “This volatility could present entry points for long-term investors.”

Credit: CNN Newsource

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