Alphabet Stock Drop Pressures US Markets as Nvidia’s AI Edge Comes Into Question

US stocks slipped on Tuesday as Alphabet Inc.’s latest advancements in artificial-intelligence hardware stirred concerns about Nvidia Corp.’s market leadership, while traders parsed delayed economic figures for clues about the Federal Reserve’s next policy steps.

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By 10:07 a.m. in New York, the S&P 500 was down 0.2%, putting its two-session winning streak at risk. The Nasdaq 100, heavily weighted toward tech, fell 0.77% after sliding as much as 1.3% at the open. Meanwhile, the Cboe Volatility Index hovered near 21, signaling a cautious tone across markets.

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Interestingly, the equal-weighted S&P 500 which treats giants like Amazon.com Inc. the same as smaller names such as Axon Enterprise Inc. outperformed, rising 0.4% and highlighting broader market resilience beneath the surface.

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Alphabet shares jumped 2.2% at the start of trading, putting the company on pace to reach a $4 trillion market valuation for the first time. The rally followed a report that Meta Platforms Inc. is considering a multibillion-dollar investment in Google’s AI chips. Nvidia, on the other hand, reversed part of Monday’s tech-driven gains, sliding as competition concerns gripped the sector.

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The rapid growth of the AI industry has drawn increased scrutiny, with valuations running hot and volatility picking up. Matt Maley of Miller Tabak & Co. cautioned that investors shouldn’t assume the powerful bullish momentum from spring through early fall will return easily. He flagged Nvidia’s recent performance as a potential warning sign.

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Nvidia’s muted trading “since they reported earnings is definitely a concern for the bulls given that it is such a highly weighted stock in the major averages and the key tech ETFs,” Maley said. He added that if Nvidia continues to weaken and if Alphabet’s rally cools tech could face another meaningful pullback before year-end.

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Investors also digested long-awaited economic releases from September, offering an overdue look at the state of the American consumer. Retail sales rose slightly, suggesting that shoppers may be slowing after several months of stronger-than-expected spending.

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Producer prices, meanwhile, rose in September as energy and food costs pushed wholesale inflation higher. The 0.3% increase came in exactly where economists surveyed by Bloomberg had anticipated.

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Clark Bellin, president and chief investment officer at Bellwether Wealth, said that the producer price index being perfectly in line with expectations gives the Fed firmer footing to deliver another rate cut in December. “This data is old it’s from September but it’s the only inflation data the Fed can reference as it makes decisions right now,” Bellin noted.

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Brian Jacobsen of Annex Wealth Management emphasized that inflation trends have shifted more than consumer spending patterns. With price adjustments to higher tariffs likely nearing completion, he said markets shouldn’t read too much into the old data. “Taking a pause on rate cuts would probably do more damage to sentiment than a cut would help,” Jacobsen explained, adding that Fed Chair Jerome Powell “doesn’t need to be the Grinch that stole Christmas.”

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Several individual names posted major moves following earnings and guidance updates. Kohl’s Corp. surged 34% after lifting its full-year outlook for the second consecutive quarter, giving investors renewed confidence in the retailer’s turnaround efforts. Abercrombie & Fitch Co. rallied 24% after raising the low end of its 2026 revenue and earnings per-share forecasts.

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Defense contractor Amentum Holdings Inc. also advanced after reporting stronger fourth-quarter revenue growth. On the downside, Oracle Corp. came under pressure after CFRA downgraded the stock to “hold” from “buy,” citing concerns about the company’s debt levels.

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