Key Points
- Amazon-OpenAI Deal: Amazon (AMZN) secured a landmark $38 billion multi-year cloud computing agreement with OpenAI, propelling the company to record highs and showcasing AWS's dominance in AI infrastructure.
- AI Sector Correction: Markets experienced a dramatic reversal midweek, with the S&P 500 (SPY) posting its largest loss in weeks as investors questioned lofty valuations in the artificial intelligence sector, wiping out over $1 trillion in AI-related market capitalization.
- Nvidia's Historic Decline: Nvidia (NVDA) shed approximately $450 billion in market value over three trading days, marking its steepest decline since January 2025 as concerns mounted over China export restrictions and stretched valuations.
- Bitcoin Below $100,000: Cryptocurrency markets joined the risk-off sentiment as Bitcoin (BTC.X) dipped below the critical $100,000 support level for the first time since late June amid broader market weakness.
- Tesla Shareholder Victory: Tesla (TSLA) shareholders approved CEO Elon Musk's unprecedented $1 trillion compensation package, positioning the electric vehicle manufacturer for potential massive expansion in autonomous vehicles and robotics.
- Earnings Mixed Results: Corporate earnings season delivered a dichotomy—AMD (AMD) exceeded expectations with record revenue despite stock declines, while Lucid (LCID) and Figma (FIG) surprised positively, though market sentiment remained cautious.
Overview
The week of November 3-7, 2025, presented a striking paradox for financial markets. The period began with euphoria surrounding major artificial intelligence infrastructure deals and robust corporate earnings, but by midweek, sentiment shifted dramatically as investors reassessed the sustainability of valuations that had reached unprecedented levels. The Amazon-OpenAI partnership initially energized markets, yet within days, concerns about overextended AI valuations triggered a significant correction that reverberated across global equities, cryptocurrencies, and commodities. This week underscored the market's sensitivity to valuation metrics and the growing debate about whether the artificial intelligence boom represents genuine economic value or speculative excess.
Financial Markets Weekly Recap
Equities
Market Indices: The week witnessed extreme volatility in major benchmarks. The S&P 500 (SPY) opened with gains on November 3 as the Amazon-OpenAI deal buoyed sentiment, but subsequently posted its largest loss in weeks with a 1.1% decline as valuations came under scrutiny. The Nasdaq Composite (QQQ) initially gained 0.5% on November 3 before tumbling more than 2% on November 4 amid broad-based selling pressure in technology stocks. By week's end, the Nasdaq had declined approximately 4.5% for the week, its worst performance since April when President Trump's "Liberation Day" tariff policies triggered a global market correction. The Dow Jones (DIA) displayed relative resilience, declining less sharply than the tech-heavy indices, closing down 0.48% on November 3 but experiencing weakness as the week progressed.
Sector Performance: The artificial intelligence and semiconductor sectors bore the brunt of the correction. Nvidia (NVDA), which briefly achieved a $5 trillion market capitalization earlier in the week, experienced a historic decline of approximately $450 billion over three trading days, representing a 16% plunge from its Monday close. The company's shares fell sharply after months of record gains, driven by concerns surrounding U.S.-China export restrictions on advanced semiconductors, potential production delays for the upcoming Blackwell GPU series, and mounting questions about whether valuations had become excessive relative to near-term earnings growth. Other semiconductor giants faced similar pressures, with AMD (AMD) declining 5% to 6% despite delivering record quarterly revenue, Broadcom falling substantially, and Super Micro Computer plummeting 25%, representing the poorest performer in the S&P 500 for the week.
Energy stocks drew support from oil market dynamics. Chevron (CVX) and Exxon (XOM) benefited from crude oil volatility, while Lockheed Martin (LMT) and Northrop Grumman (NOC) displayed relative strength amid geopolitical considerations.
Corporate Highlights:
- Amazon (AMZN): Shares surged nearly 4% to record highs on November 3 following the announcement of the $38 billion multi-year cloud computing partnership with OpenAI. The seven-year agreement grants OpenAI access to hundreds of thousands of Nvidia graphics processing units through Amazon Web Services' infrastructure, with the majority expected operational by the close of 2026. This partnership marked OpenAI's initial major cloud contract with Amazon after its transformation into a public benefit corporation, representing a strategic pivot from its historical relationship with Microsoft. AWS demonstrated that it possesses unique capabilities to operate large-scale AI infrastructure with clusters exceeding 500,000 chips, addressing previous investor concerns that the cloud division was losing momentum to competitors. Following strong third-quarter results showing AWS revenue surge of 20% year-over-year to $33 billion—the fastest growth rate since 2022—the partnership validated AWS's AI ambitions and competitive positioning.
- Nvidia (NVDA): The semiconductor giant experienced substantial volatility throughout the week. Initial strength on November 3 as President Trump announced that the company's most advanced chips would be reserved exclusively for U.S. firms, and as Microsoft received export licenses for chip deployments in UAE data centers, gave way to severe selling pressure. By November 4, the stock plummeted 3.96% as investors initiated broad profit-taking after an extraordinary rally. The company's market capitalization collapsed from nearly $5 trillion to approximately $4.47 trillion by Friday, representing losses exceeding $530 billion from peak to week's end. Export restrictions to China—which historically represented approximately 20% of Nvidia's data center revenue—fueled concerns about future growth rates. Analysts noted that Nvidia had become "priced for perfection," with any deviation from exceptional results triggering heavy selling pressure.
- AMD (AMD): Despite delivering a stellar quarterly performance with record revenue of $9.2 billion (up 36% year-over-year) and non-GAAP diluted earnings per share of $1.20 (beating expectations of $1.17), shares fell approximately 5% on November 4. Data center revenue climbed $4.3 billion (+22% year-over-year), while client and gaming revenue surged $4.0 billion (+73% year-over-year). CEO Lisa Su emphasized unprecedented demand for compute capabilities and highlighted the company's rapidly scaling data center AI business entering its next phase of growth. However, investors remained concerned about near-term visibility and the broader sector's valuation multiple, demonstrating that earnings beats offered insufficient support amid the sector's rotation.
- Palantir Technologies (PLTR): The analytical software provider experienced an 8% stock decline on November 4 despite exceeding both earnings and revenue expectations. The company reported third-quarter revenue of $1.18 billion (beating consensus of $1.09 billion) and adjusted earnings per share of $0.21 (versus expected $0.17). Management raised full-year revenue guidance to $4.4 billion from $4.15 billion and full-year free cash flow to $1.9-2.1 billion. However, Wall Street analysts raised concerns about the company's elevated forward 12-month price-to-earnings ratio of 230x, substantially higher than the "Magnificent Seven" tech giants. Jefferies analyst Brent Thill noted that the risk/reward scenario appeared unfavorable and that valuations appeared vulnerable to any cooling in AI enthusiasm. The stock decline despite strong results highlighted the market's growing sensitivity to valuation metrics across the technology sector.
- Lucid Group (LCID): The electric vehicle manufacturer reported mixed results with revenue of $336.6 million (up 68% year-over-year) and deliveries reaching 4,078 vehicles (up 47% year-over-year), representing the seventh consecutive quarter of record deliveries. However, the company posted a net loss of $1.03 billion, indicating continued substantial production challenges and elevated manufacturing costs. Despite the positive revenue beat, shares initially declined as investors focused on the company's persistent inability to achieve profitability and the widening cash burn rate despite increasing sales. The company secured increased financing from Saudi Arabia's Public Investment Fund (raising the credit facility from $750 million to $2 billion), bringing total liquidity to approximately $5.5 billion. This financial support alleviated immediate concerns about the company's viability, though unit economics remained severely negative.
- Figma (FIG): The design software provider delivered impressive third-quarter results with revenue of $274.2 million (up 38% year-over-year), surpassing consensus estimates. The company announced a net loss of $1.10 billion due to significant one-time stock-based compensation charges related to its July initial public offering, though adjusted earnings per share reached $0.10 versus expected $0.05. Notably, approximately 30% of customers spending over $100,000 in annual recurring revenue adopted Figma Make, the company's AI-powered design generation tool, on a weekly basis, demonstrating strong product-market fit for AI-enhanced offerings. Management raised full-year revenue guidance to $1.044-1.046 billion and fourth-quarter guidance to $292-294 million, both exceeding analyst expectations. Shares surged up to 6% following the earnings announcement, reflecting investor enthusiasm for the company's AI-driven growth trajectory despite competitive pressures from Adobe (ADBE) and Atlassian (TEAM).
- Tesla (TSLA): Shareholders overwhelmingly approved CEO Elon Musk's historic compensation package on November 6, with over 75% voting in favor. The unprecedented $1 trillion compensation structure includes stock options tied to ambitious performance targets, including growing Tesla's market capitalization to $8.5 trillion (more than 500% above current levels), achieving 20 million vehicle deliveries, deploying 1 million robots, and operating 1 million robotaxis commercially. The package also sets financial milestones starting with $50 billion in annual adjusted profits and escalating by $400 billion increments. If Musk achieves even a portion of these targets, his stake in Tesla could increase from 13% to nearly 29%, granting him the voting control he has sought. Following the shareholder vote announcement, Tesla shares gained 2% as investors endorsed management's vision for transformative growth initiatives centered on autonomous vehicles and artificial intelligence.
Commodities
Gold (GLD): Gold prices drifted below the psychologically important $3,950 level as the week progressed, entering a consolidation phase after prior rallies. Prices traded around $3,930-$3,950 per ounce, reflecting a balance between safe-haven demand and a slightly stronger U.S. dollar. The precious metal had reached approximately $4,378 per ounce in September before entering a correction, with the decline partly attributable to reduced expectations for additional Federal Reserve rate cuts. Federal Reserve Chairman Jerome Powell cooled market enthusiasm for December rate cuts, citing internal disagreements and limited economic data availability due to the government shutdown. Despite the recent weakness, gold maintained approximately 50% year-to-date gains, reflecting sustained investor interest in defensive instruments.
Oil: Crude oil prices reflected mixed sentiment during the week, influenced by global economic concerns balanced against geopolitical considerations. Brent crude futures (BNO) fluctuated as market participants assessed weakening demand signals amid broader economic uncertainty, partially offset by traditional risk premium considerations.
Cryptocurrencies
Bitcoin (BTC.X): The largest cryptocurrency experienced significant downward pressure throughout the week, plunging below the critical $100,000 psychological support level for the first time since late June. Bitcoin traded as low as $99,900 during the week before recovering slightly to approximately $100,110 by week's end. Over the past 24 hours, Bitcoin declined 2.9%, while the weekly loss approached 8.9%. The cryptocurrency's struggle reflected broader risk-off sentiment as institutional and retail investors retreated from high-beta assets amid concerns about stretched valuations and reduced market liquidity linked to the ongoing U.S. government shutdown. According to trading analysis, the next key support level sits at $98,000. Spot Bitcoin ETFs recorded inflows for the first time in eight days, suggesting some institutional interest at depressed prices. The crypto fear and greed index stood at 24, reflecting extreme fear conditions.
Ethereum (ETH.X): The second-largest cryptocurrency by market capitalization experienced even steeper declines than Bitcoin, falling approximately 4.6% over the past day and 15.7% over the week. Ethereum traded around the $3,200 level by week's end, retreating significantly from prior levels as investors rotated out of risk assets. Almost all top-10 cryptocurrencies by market capitalization declined during the week, with the exception of the memecoin Dogecoin, which managed a modest 0.3% gain. Broader liquidations in the crypto markets totaled $674.3 million over 24 hours, with $76.8 million liquidated in a single hourly period.
Currencies
EUR/USD: The euro pair experienced significant weakness during the week, reflecting broader market dynamics. EUR/USD bounced off the 200-day moving average but remained under pressure as investors reassessed the growth outlook for the eurozone amid deteriorating economic data. The pair traded in a consolidation range, with the 200-day moving average providing technical support below current prices. Analyst perspectives from major institutions remained cautious, with JP Morgan projecting EUR/USD at 1.20 by year-end 2025, UBS expecting a rise toward 1.26 in 2026, and Morgan Stanley targeting 1.26 by June 2026. However, near-term technicals remained challenged, with momentum indicators pointing toward continued downside pressure.
Employment and Economic Data
Private Payrolls: The ADP National Employment Report revealed that private sector employment increased by 42,000 jobs in October, the first monthly gain since July. However, ADP's chief economist Dr. Nela Richardson characterized the hiring as "modest relative to what we reported earlier this year," noting that pay growth had remained "largely flat for more than a year." The slowdown in hiring, combined with weak wage pressures, suggests balanced supply and demand in labor markets. Notably, weakness appeared concentrated in professional business services, information technology, and leisure hospitality sectors, which posted job losses for the third consecutive month. This tepid employment picture contributed to broader economic concerns that weighed on equity markets as the week progressed.
Consumer Sentiment: The University of Michigan's consumer sentiment index fell to a nearly 3.5-year low in early November, exceeding analyst expectations for weakness. The precipitous decline reflected mounting consumer concerns about the extended government shutdown, which had surpassed one month, and its potential negative economic consequences. This deterioration in consumer psychology represented another headwind for equity valuations.
China Trade Data: Chinese exports declined 1.1% year-over-year in October, marking a significant disappointment against expectations of 2.9% growth and representing the largest decline in eight months. Imports rose only 1.0% year-over-year versus expectations of 2.7%, indicating softening demand both domestically and internationally. This weakness in China's trade data raised concerns about global growth prospects and contributed to risk-off sentiment.
Corporate Sentiment and Market Tone
Throughout the week, numerous Wall Street executives issued cautionary statements about market valuations. Nvidia CEO Jensen Huang stirred additional concerns by indicating that China was likely to "win the AI race" in technology development, later clarifying he meant China would advance rapidly in AI capabilities. These comments, combined with Palantir CEO Alex Karp's defense of elevated valuations against short-seller criticism, highlighted the emerging debate about whether AI enthusiasm had outpaced fundamental economic realities.
The Federal Reserve's increasingly hawkish messaging also contributed to market weakness. Vice Chair Philip Jefferson stated that interest rates continue to have a "somewhat restrictive" effect on the economy and that "it makes sense to proceed slowly with rate cuts as we approach the neutral rate." This commentary effectively reduced expectations for near-term rate relief and supported a stronger dollar, pressuring risk assets.
Market Outlook
As markets head into the following week, investors will focus on several critical developments:
- Valuation Reassessment: The magnitude of the AI sector correction suggests that investors are beginning to demand higher growth rates to justify current multiples. Upcoming corporate guidance will be carefully scrutinized to determine whether earnings can support equity prices.
- Monetary Policy Trajectory: With the Federal Reserve signaling slower rate cuts and potentially extended periods at current levels, the appeal of equities relative to fixed income securities may continue to weigh on valuations.
- China Export Pressures: Ongoing restrictions on semiconductor exports to China represent a structural headwind for companies like Nvidia (NVDA) and other chipmakers heavily dependent on China revenue.
- Corporate Earnings Quality: The market's reaction to strong earnings that still generated stock declines—as demonstrated by AMD and Palantir—indicates that investors increasingly demand not just earnings beats but accelerating guidance and exceptional forward prospects to justify current valuations.
- Government Shutdown Resolution: The extended U.S. government shutdown's impact on consumer confidence and government contractor revenues (particularly relevant to Palantir) warrants close monitoring.
The week's events have demonstrated that despite the extraordinary rally in artificial intelligence-related equities throughout 2025, valuation considerations can quickly reassert dominance over sentiment. Markets appear to be entering a more discriminating phase where earnings quality, forward guidance, and valuation multiples command heightened scrutiny. The dramatic $1 trillion-plus decline in market capitalization across AI-related stocks within a few days serves as a reminder that momentum-driven rallies eventually confront valuation reality, and even extraordinarily successful companies are not immune to correction cycles.