Callum Jones in New York

Thu 20 Nov 2025 21.04 GMT

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Fears of a growing bubble around the artificial intelligence frenzy resurfaced on Thursday as leading US stock markets fell, less than 24 hours after strong results from chipmaker Nvidia sparked a rally.

Wall Street initially rose after Nvidia, the world’s largest public company, reassured investors of strong demand for its advanced data center chips. But the relief dissipated, and technology stocks at the heart of the AI boom came under pressure.

The benchmark S&P 500 closed down 1.6%, and the Dow Jones industrial average closed down 0.8% in New York. The tech-focused Nasdaq Composite closed down 2.2%.

Earlier in the day, the FTSE 100 had closed up 0.2% in London while the Dax had risen 0.5% in Frankfurt. The Nikkei 225 had climbed 2.65% in Tokyo.

Nvidia, now valued at some $4.4tn, has led an extraordinary surge in the valuations of AI-related firms in recent months. As firms splurge on chips and data centers in a bid to get a foothold in AI, fears of a bubble have mounted.

While Nvidia’s highly anticipated earnings exceeded expectations on Wednesday, as the chipmaker continues to enjoy robust demand, concerns persist around the firms using those chips to invest in AI, spending heavily and driving that demand.

“The people who are selling the semiconductors to help power AI doesn’t alleviate the concerns that some of these hyper-scalers are spending way too much money on building the AI infrastructure,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. “You have the company that’s benefiting it, but the others are still spending too much money.”

A mixed jobs report on Thursday morning, which revealed healthy growth in the labor market in September but a slight rise in unemployment, also reinforced expectations that policymakers at the Federal Reserve will likely keep interest rates on hold at their next meeting, in December.

Shares in Nvidia sank 3.2%. The VIX, a measure of market volatility, also climbed 8%.

Reuters contributed reporting