"Investors have become so skittish of stocks linked to AI that it's dragging down the entire U.S. market. Exhibit A: Nvidia, the AI chipmaker that is the largest company on planet earth by market cap. Nvidia's performance as a business has been unambiguously excellent. Its Q4 2025 earnings call was another blowout, expectations-beating, record performance."
"Out of 13 total quarterly reports, [Nvidia] has reported ten triple plays (beat EPS, beat sales, raised guidance). In its first six earnings reports following the release of ChatGPT, NVDA shares averaged a one-day gain of +10% on its earnings reaction day. Following its last seven reports, though, shares have averaged a decline of -3%."
"The equal-weight S&P 500-a notional index that ignores the market cap of each stock in favor of counting them all equally-is up 6.7% year to date, suggesting that the U.S. market would be better off without the tech stocks that dominate it. The tech-heavy Nasdaq, by contrast, is down 1.56% for the year."
The S&P 500 is experiencing weak performance compared to international markets, with the index up only 0.93% year-to-date while the FTSE 100, STOXX Europe 600, Nikkei 225, and KOSPI show substantially stronger gains. This underperformance stems from what Yardeni Research terms "AI derangement syndrome," where investors have become overly cautious about AI-related stocks. Nvidia, despite exceptional business performance and consistent earnings beats, saw its stock decline 5.46% yesterday and is down 0.86% year-to-date. The equal-weight S&P 500 is up 6.7% year-to-date, suggesting the market would perform better without dominant tech stocks. AI-linked technology stocks are significantly dragging down overall U.S. market performance.
#ai-sentiment #sp-500-underperformance #nvidia-stock-decline #tech-sector-weakness #international-market-outperformance
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