Equities Dip as AI Optimism Cools Following SoftBank’s Nvidia Exit

Stock market gains lost some steam as investors questioned whether the sky-high valuations of artificial intelligence leaders can hold up—especially after Japan’s SoftBank Group Corp. announced it had completely exited its position in Nvidia Corp.

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Futures for both the S&P 500 and Nasdaq 100 edged lower, erasing part of Monday’s advance that came on optimism over a potential end to the U.S. government shutdown. SoftBank confirmed it sold its entire Nvidia stake, raising $5.8 billion as part of founder Masayoshi Son’s broader strategy to build his own presence in the AI space. Nvidia shares dipped 0.7% in premarket trading following the news.

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Meanwhile, the U.S. dollar was poised for its first gain in five sessions. The British pound led losses among major currencies after UK unemployment data came in higher than anticipated, leading traders to boost bets that the Bank of England could cut interest rates as soon as next month. In the crypto space, Bitcoin also moved lower.

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Across the Atlantic, European equities moved in the opposite direction, with benchmark indexes climbing about 0.8% as consumer-focused stocks outperformed. U.S. bond markets were closed for the Veterans Day holiday, leaving investors to navigate global sentiment without the usual cues from Treasury trading.

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Market participants continue to weigh a complex mix of risks as they debate whether this year’s powerful equity rally still has legs. While the resolution of the government shutdown would remove a key economic headwind and restore access to important data—helping the Federal Reserve’s policy outlook become clearer—concerns linger that the biggest winners of 2025’s AI-driven surge may have become overextended.

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Adding to the cautious mood, trade tensions resurfaced after The Wall Street Journal reported that China plans to expedite rare earth export approvals for most companies, except those tied to the U.S. military. The move rekindled uncertainty over how durable the fragile truce between Washington and Beijing might be.

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“The valuations don’t seem outrageous—unless there’s growing doubt about the growth story,” said Helen Jewell, chief investment officer for EMEA fundamental equities at BlackRock Inc., in an interview with Bloomberg TV. “That’s why, even though we remain positive on AI’s long-term potential, we expect the path forward to be choppy.”

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Her comments reflect a broader theme in markets right now: investors are increasingly torn between enthusiasm for transformative technologies like AI and fears that current prices already reflect too much optimism. Nvidia, the poster child of the AI boom, has seen its stock skyrocket over the past year, becoming one of the key drivers of the S&P 500’s advance. But as companies like SoftBank lock in profits and shift capital elsewhere, questions are surfacing about how much upside remains.

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Traders are also mindful that central bank policy remains a wild card. Expectations for lower interest rates have helped fuel risk appetite throughout the year, but any signs of sticky inflation—or stronger-than-expected economic data—could challenge that outlook. A firm U.S. dollar and rising yields could further pressure equity valuations that are already near record highs.

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Even so, the AI narrative remains one of the market’s most compelling drivers. Investors continue to see transformative potential across industries, from energy and finance to healthcare and consumer technology. Still, as Jewell noted, periods of rapid innovation often come with bursts of volatility, and near-term pullbacks are not uncommon in such fast-growing sectors.

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For now, market sentiment appears cautious but not panicked. The combination of a likely end to the government shutdown, a potential Fed rate cut next month, and ongoing enthusiasm for technological innovation could help steady equities after this brief wobble. Yet, with valuations stretched and geopolitical risks resurfacing, traders are bracing for a bumpier road ahead.

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