Palantir-Led Tech Stock Sell-Off Puts AI ETFs On The Defensive

Core Insights - Wall Street experienced a significant sell-off in tech stocks, erasing over $500 billion in market value in one day, primarily driven by valuation fatigue despite strong earnings from companies like Palantir Technologies Inc [1][4] - The Global X Artificial Intelligence & Technology ETF, a key indicator for AI investments, saw a 3.7% decline, reflecting the broader market's retreat from high-flying tech names [2][3] - The Shiller CAPE ratio has reached levels not seen since the dot-com bubble, indicating potential long-term market challenges ahead [5] Company-Specific Developments - Palantir Technologies Inc faced a 9% drop in stock price despite positive earnings and raised guidance, highlighting the impact of valuation concerns after a 170% increase in less than a year [1] - Major holdings in the Global X Artificial Intelligence & Technology ETF, including NVIDIA, Microsoft, Amazon, and Oracle, collectively lost tens of billions in value, contributing to the ETF's decline [2] Industry Trends - The sell-off in AI-related stocks and ETFs indicates a broader market correction, as investors reassess the sustainability of high valuations in the tech sector [4][6] - The Global X Robotics & Artificial Intelligence ETF also experienced a 3% decline, showcasing the concentrated unwinding of AI investments [3] - Leveraged products linked to AI themes, such as the Direxion Daily AI & Big Data Bull 2X Shares, faced even steeper losses, dropping more than 7% as traders exited momentum-driven trades [3]