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Investors aren't excited by Pinterest's revenue forecast

Key Takeaways

• Pinterest's earnings and holiday quarter guidance fell short of forecasts, and its shares dropped in morning trading.
  
• The social media and search platform set a record for number of monthly active users.

Shares of Pinterest (PINS) plunged after the visual social media and search company missed profit expectations and gave weak holiday quarter guidance.

The company posted third-quarter adjusted earnings per share of $0.38, three cents below what analysts surveyed by Visible Alpha were looking for. Revenue rose 17% to $1.05 billion, in line with forecasts.

For the current quarter, Pinterest sees revenue in the range of $1.31 billion to $1.34 billion, while Visible Alpha analysts are anticipating $1.34 billion.

The news sent Pinterest shares down 20% in morning trading and into negative territory for the year. Shares of Snap (SNAP) and Meta Platforms (META) made far more muted early moves by comparison. (Read Investopedia's full daily markets roundup here.)

Why This Is Important

Pinterest's quarterly results illustrate the challenges social media platforms face as digital ad spending is slowing in North America. While the company is expanding its global audience, especially in emerging markets, it's harder to monetize users.

In the U.S. and Canada, revenue increased 9% to $786 million, and average revenue per user (ARPU) gained 5% to $7.64. Both were below Visible Alpha estimates. Global ARPU of $1.78 was slightly less than expected.

The results and outlook offset strong user growth, with the company setting a record with 600 million monthly active users. 

News of the day for Nov. 5, 2025

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AMD reported earnings late yesterday, and its shares retreated early Wednesday.

Stock futures are moving lower in early-Wednesday trading as investors continue to parse earnings reports and digest heightened worries over AI stock valuations; market watchers are monitoring Washington, with lawmakers still working to end the shutdown and investors watching for private-sector jobs numbers later today; Advanced Micro Devices (AMD) shares are falling after the chipmaker reported record revenue on strong data center sales; Super Micro Computer (SMCI) shares fell after its earnings report missed estimates; Pinterest (PINS) shares are plummeting after its earnings came in worse than expected.

Here's what you need to know today.

1. Stock Futures Pointing Lower After Markets Plunge

Stock futures were pointing lower in early trading after yesterday’s market plunge, which was powered in part by worries that artificial intelligence stocks were valued too highly. Futures tied to the tech-focused Nasdaq 100 were lower by 0.4% in premarketactoin, while those tied to the S&P 500 were down by 0.3%. Dow Jones Industrial Average futures were wavering. In yesterday’s session, the Nasdaq, S&P 500, and Dow Jones finished down a respective 2%, 1.2%, and 0.5%.

Bitcoin is trading at around $102,000. It dipped to into five-digit territory yesterday as it continues to pull back from the record high set in early October. Yields on the 10-year Treasury note, which impacts a range of consumer loans, was slightly lower at 4.08%. Gold futures moved higher to $3,975 an ounce after falling below that level in Tuesday’s session. Oil futures were lower by 0.5% to trade at around $60.21 a barrel.

2. ADP Employment Report Comes as Lawmakers Look to End Shutdown

With the government shutdown now the longest in U.S. history, lawmakers were reportedly close to a bipartisan deal that could bring an end to the work stoppage. Senate Majority Leader John Thune, a South Dakota Republican, laid out a short-term bill that could reopen the government as negotiations on healthcare funding continued, The Wall Street Journal reported.

Meanwhile, the shutdown has put a freeze on government economic data releases, so investors are watching today’s ADP employment report, which is expected to show that the private sector added 22,000 jobs in October. September’s reports showed job losses of 32,000, according to a survey of economists by The Journal and Dow Jones Newswires. The shutdown is expected to delay Friday’s release of the October U.S. jobs report.

3. AMD Shares Falling After Record Results

Advanced Micro Devices (AMD) shares are falling despite reporting record quarterly results that beat analyst estimates as demand for AI helped boost sales of its data center chips. AMD posted adjusted earnings per share of $1.20 on revenue that jumped 36% year-over-year to a record $9.25 billion in the third quarter, well above analysts' estimates compiled by Visible Alpha. For the current quarter, AMD said it sees revenue between $9.3 billion and $9.9 billion, above the analyst consensus of $9.17 billion.

CEO Lisa Su said the company's results mark "a clear step up in our growth trajectory as our expanding compute franchise and rapidly scaling data center AI business drive significant revenue and earnings growth." Shares of AMD have nearly doubled entering today’s session, but were lower by more than 4% in premarket trading.

4. Super Micro Computer Shares Drop After Earnings Miss

Super Micro Computer (SMCI) shares were lower after the chipmaker posted results that missed analyst estimates. Supermicro’s fiscal 2026 first-quarter revenue dropped more than 15% from a year ago to come in at $5.02 billion, well below the $5.78 billion that analysts surveyed by Visible Alpha were projecting. The company’s adjusted earnings per share of $0.35 was also shy of expectations.

Supermicro also offered a quarter-quarter profit forecast of $0.46 to $0.54, lower than the Visible Alpha consensus of $0.60 that was later lowered to $0.50. Supermicro lowered its revenue forecast earlier this month, citing project delays that shifted sales. While Supermicro shares are higher by more than 50% so far this year, they were down by almost 7% in premarket trading.

5. Pinterest Shares Plummet After Earnings Miss Estimates

Pinterest (PINS) shares are plunging in early trading after the social media company reported results that came in below estimates. Pinterest’s third-quarter revenue was $1.05 billion, which grew 17% from the year-ago quarter but lower than analyst estimates compiled by Visible Alpha. The company’s adjusted earnings per share of $0.38 was below the $0.41 that analysts were expecting.

CEO Bill Ready said that the company was utilizing AI technology. “We’ve become a leader in visual search and have effectively turned our platform into an AI-powered shopping assistant for 600 million consumers,” he said in a release. While Pinterest’s shares are higher by more than 7% so far this year, its share price of $32.91 was below the consensus price target of $39.75 that analysts forecasted this summer. Pinterest shares are lower by more than 18% in premarket trading.

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Americans ages 35–44 have the second-highest average income, trailing only those ages 45–54.

Key Takeaways

• The median household income for ages 35–44 was $86,473, according to the latest Federal Reserve data. That's just behind 45–54-year-olds.
• Income varies widely across groups, with homeowners and college graduates earning more than renters and those without a degree.
• Income is only part of the equation—tracking net worth provides a clearer view of your financial health and long-term stability.

Household income—and wealth—shift significantly with age. Data from the Federal Reserve’s Survey of Consumer Finances show that families typically see earnings and assets rise through midlife. For households ages 35–44, this is a key stage for building financial strength. Understanding how your household compares with others your age can provide perspective on your financial health—and how to improve it.

Why This Matters to You

Household income and net worth vary widely by age, education, and homeownership. Homeowners and college graduates tend to earn more, but careful spending and saving habits can have a bigger impact on financial security than income alone.

How Much the Average 35–44-Year-Old Earns—and How That Compares to Other Age Groups

The median household income for ages 35–44 was $86,473 in 2022, according to the Fed's latest survey. That’s higher than nearly every other age group. Only households ages 45–54 earn slightly more, with a median of $91,878.

At the other end of the spectrum, those 75 and older report median income of $49,073, reflecting retirement sources such as pensions, Social Security, and withdrawals from savings.

The 35–44 age group sits just before its peak earnings phase, often balancing multiple demands on their income, from mortgages to childcare and college tuition. (Medians are used instead of averages to reduce the influence of unusually high or low incomes.)

Important Note

In the Fed's Survey of Consumer Finances, family is defined as “the economically dominant single person or couple” and all others in the household who are dependent on them. Also, the survey includes numerous income sources: “wages, self-employment and business income, taxable and tax-exempt interest, dividends, realized capital gains, unemployment insurance, food stamps and other related support programs provided by the government, pensions and withdrawals from retirement accounts, Social Security, alimony and other support payments, and miscellaneous sources.”

What the Fed’s Data Reveal About America’s Income Gaps

Although the Fed’s survey doesn’t break out income data by education level or homeownership for individual age groups, the results across U.S. households overall reveal clear patterns that likely hold for 35–44-year-olds as well. Across all households, the median U.S. income was $70,260.

Education Creates the Widest Income Gaps

The survey highlights especially wide income gaps tied to education. All families without a high school diploma have a median income of $32,430, compared with $117,820 for those with a college degree. In the middle are high school graduates earning a median of $52,960, and those with some college earning a median of $60,530.

While a college degree "helps get your foot in the door and signals both subject knowledge and a capacity for learning,” said Tyler Gilley, CFP, a wealth advisor at Halbert Hargrove in Long Beach, California, “industry choice and skillsets are becoming increasingly important.” He noted that specialized abilities often matter more than a broad degree in fields reshaped by artificial intelligence (AI), such as data science.

Homeownership Makes a Big Difference for Wealth

The survey also reveals large divides related to housing status. Households of all ages that own their home earn more than twice as much as renters—$94,040 versus $42,160. Whether you rent or own, monthly payments are a given. However, how those payments affect your long-term finances can differ significantly.

"Homeownership—especially with a fixed-rate mortgage—offers predictable payments, which is a major advantage for budgeting,” Gilley said. “Rent, on the other hand, is subject to inflation and can rise unpredictably, potentially outpacing income growth and straining financial stability."

Paying down your mortgage principal builds equity and serves as a form of long-term savings, but being disciplined and maintaining liquid assets and an emergency fund are critical, Gilley said. He also noted that renting may be a better choice in some circumstances, with no one-size-fits-all solution for everyone.

Why Net Worth Tells a Clearer Story Than Income

Those income gaps only tell part of the story. What really determines financial stability is how much households keep.

Income shows how money flows in, but net worth, the value of what a household owns minus what it owes, shows how money sticks. According to the Fed’s survey, the median household net worth for those ages 35-44 was $135,300.

The Fed defines net worth as the total value of financial and non-financial assets—homes, real estate, vehicles, businesses, retirement accounts, stocks, bonds, and more—minus liabilities such as mortgages, credit card balances, and other loans.

"Two households may earn similar incomes, but their financial security can differ dramatically based on how they manage spending," Gilley said.

If you liken income to water flowing into a bucket, he said, consider one household with a steady stream that fills a bucket with holes in it due to unchecked spending and expenses. Compare that to another household with a smaller stream but fewer holes thanks to budgeting and mindful spending. The latter bucket retains more water, leading to greater financial stability and savings.

"The key isn’t just how much you earn, but how much you keep," he said.

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Shares of AMD have more than doubled in value in 2025 through Tuesday's close.

Key Takeaways

• Advanced Micro Devices posted record quarterly results that topped analysts' estimates on strong sales of its data center chips.
• The chipmaker's fourth-quarter outlook was also well above the analyst consensus.

Advanced Micro Devices (AMD) on Tuesday reported record quarterly results above analysts' projections as booming demand for AI helped boost sales of its data center chips.

AMD posted adjusted earnings per share of $1.20 on revenue that jumped 36% year-over-year to a record $9.25 billion in the third quarter, well above analysts' estimates compiled by Visible Alpha.

Sales in AMD's data center segment—by far its largest—rose 22% year-over-year to $4.3 billion, slightly above expectations. The results did not include any revenue from shipments of AMD's MI308 AI chip line to China, which AMD has said it would resume after ironing out a revenue-sharing agreement with the Trump administration.

CEO Lisa Su said the strong results mark "a clear step up in our growth trajectory as our expanding compute franchise and rapidly scaling data center AI business drive significant revenue and earnings growth."

Why This Is Significant

AMD has faced growing expectations heading into Tuesday's print to impress investors with strong revenue growth that would justify its stock gains this year amid worries about an AI bubble. The chipmaker's solid showing for the third quarter could help it defend its recent momentum.

For the current quarter, AMD said it sees revenue between $9.3 billion and $9.9 billion, above the analyst consensus of $9.17 billion. That range doesn't include any revenue from AMD MI308 shipments to China either, AMD said.

Shares of AMD slipped about 1% in extended trading following the release, after dropping close to 4% in Tuesday's session amid broader declines as worries about an AI bubble weighed on tech stocks. The chipmaker's stock has more than doubled in value this year.

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Cava is seeing a pullback among younger consumers, who are facing a number of economic headwinds, CFO Tricia Tolivar says.

Key Takeaways

• The Mediterranean fast-casual chain Cava is seeing younger consumers come in less frequently, though they tend to be ordering just as much, says CFO Tricia Tolivar.
• This demographic is facing a number of economic headwinds, such as higher student loan bills, and is also dining out less at another fast-casual chain: Chipotle.

Cava is the latest fast-casual brand to warn that younger consumers are losing their appetites.

The Mediterranean-style fast-casual chain late Tuesday reported slower same-restaurant sales and revenue growth in the third quarter than in recent periods. Cava Group (CAVA) is not immune from the economic pressures weighing on 18- to 34-year-olds, CFO Tricia Tolivar said, though she said it is attracting a bigger share of those still dining out.

"Within their basket at Cava, we’re not seeing significant changes," Tolivar told Investopedia, noting that consumers are ordering typical levels of premium proteins, drinks and pita chips. But there is "more of an overall general sense of being thoughtful about frequency" of dining out, she said.

What This News Means for Consumers

Some fast-casual chains say that in the face of an uncertain economy, younger consumers are eating out less frequently. The sector, Chipotle executives said, has developed a reputation for suboptimal value at a time when that's exactly what diners are looking for. Cava, which reported quarterly results today, is the latest to tell its version of this story.

Chipotle Mexican Grill (CMG) also highlighted caution among young Americans, specifically citing 25- to 34-year-olds who make less than $100,000 annually. Both Cava and Chipotle want to be known for offering value, with fresh ingredients and generous portions. But the fast-casual sector's reputation in that respect has taken a hit as young Americans face growing student loan bills, slower wage growth and an unfavorable job market, Chipotle CEO Scott Boatwright said on a conference call last week.

"The fast-casual sector is just out of favor and has been deemed unaffordable," Boatwright said, according to a transcript made available by AlphaSense. He said Chipotle needs to better showcase the value it offers and to "differentiate what makes Chipotle unique and special."

Cava reported same-restaurant sales growth of 1.9% year-over-year in the third quarter, along with a 20% increase in revenue to nearly $290 million. Both figures came in below analyst expectations, according to Visible Alpha consensus estimates. Diluted earnings per share of $0.12 were also shy of the $0.13 anticipated. The company lowered its outlook for the full fiscal year.

The eatery says a popular steak offering in 2024 skewed year-over-year comparisons. Still, Cava's same-restaurant sales growth is the lowest year-over-year rate reported by Cava over the past 10 quarters, according to data from Visible Alpha.

Tolivar said there are some bright spots for Cava. People are unlikely to cut back by recreating Cava meals at home, she said, since many items like shawarma, meat cooked on a spit, can be challenging to make.

Cava is also seeing "strength in the lower-income brackets," where people may appreciate that Cava has raised prices less than others in recent years, Tolivar said.

"We’re more accessible to lower-income consumers now than we have been in the past," she said.

Shares of Cava finished Tuesday down less than 2% ahead of the results, leaving them off some 54% for 2025. Read Investopedia's full daily markets coverage here.

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KEY TAKEAWAYS

• The rate of price increases for daycare in September was 1.5 times higher than the overall inflation rate.
• Rather than paying for pricy childcare, more parents, specifically women, are dropping out of the labor force to save money and care for their children.

With the price of childcare escalating, even faster than rent and college tuition for some families, more mothers are opting out of a job and becoming full-time caregivers for their children.

The cost of daycare increased by 5.2% in September compared to the same period last year, according to a report from Bank of America. That is almost twice as fast as overall inflation, which rose 3% annually in September, according to the Bureau of Labor Statistics.

This year, for the first time since 2021, there was an increase in the number of women who said their family is the reason they are not in the labor force, according to the bank.

Childcare costs are rising so fast that the price for one child is more than a month's rent for some families, according to a 2024 report from the Department of Labor. Average costs also surpassed the average annual tuition and fees at a four-year public college by nearly $1,800, according to a report from The Conference Board.

Why This Matters

With childcare costs rising, many parents are leaving the labor market to care for their children, creating gaps that are not being filled by older generations. As fewer young Americans plan to have children due to high costs, the future labor force could also be at risk, potentially slowing economic growth and business competition.

More Women Are Quitting Their Jobs To Care For Their Children

As women are more likely to bear the brunt of caregiving responsibilities, the majority of parents dropping out of the labor market to care for their children are mothers.

There are now fewer families with two or more incomes who are paying for childcare, which means more parents, rather than paying for expensive childcare, are likely leaving their jobs to save money and care for their kids, according to Bank of America researchers.

Women's participation in the labor market has declined over the past few months, in contrast to men's participation, which has generally increased.

Additionally, from 2022 to 2024, approximately seven in 10 mothers with a child aged six and under who were not seeking employment reported being unable to work because they couldn't arrange childcare or had other family responsibilities, according to a survey from the Federal Reserve Bank of St. Louis.

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Shares of AI software company Palantir had a rough Tuesday after reporting earnings.

Key Takeaways

• Shares of an AI software giant tumbled on Tuesday, Nov. 4, 2025, even after its earnings report revealed solid growth, while a fast-food company benefitted from strong quarterly results.
  
• Palantir Technologies beat third-quarter sales and profit forecasts, but shares of the data analytics software giant fell.
  
• A strong performance by Taco Bell helped drive an upbeat quarter for parent company Yum! Brands. Its shares moved higher.
  

An artificial intelligence software powerhouse came under pressure despite a strong earnings report, while shares of a fast-food company rose after it posted strong quarterly results and said it might offload its underperforming pizza chain.

Major U.S. equities indexes dropped Tuesday as investors reacted to the latest installment of earnings reports and fretted over equity valuations. The S&P 500 fell 1.2%, while the Dow lost 0.5%. Technology was the weakest-performing sector in the benchmark index; that also weighed on the Nasdaq, which ended 2% lower. Investopedia's full daily market roundup is available is available here. 

Despite a strong earnings report, shares of data analytics software giant Palantir Technologies (PLTR) tumbled 8%. The company posted better-than-expected sales and profits for the third quarter and raised its full-year revenue forecast, highlighting strong demand. However, some analysts have expressed concerns about the valuation of the AI darling's stock following its meteoric rise, and a regulatory filing revealed Monday that "Big Short" investor Michael Burry had taken a bearish position in Palantir.

Shares of Norwegian Cruise Line Holdings (NCLH) sank 15%, falling the most of any stock in the S&P 500, after the cruise operator reported mixed third-quarter results. While adjusted profit surpassed forecasts, revenue for the period came in below expectations. The cruiser said tariff-related uncertainty and the government shutdown were weighing on demand, while lower participation in its air program, which helps passengers coordinate flights to match their cruise itineraries, also affected revenue. Shares of competitors Carnival (CCL) and Royal Caribbean (RCL) also fell.

Uber Technologies (UBER) shares skidded 5% after the ride-sharing and food delivery firm reported lower-than-expected operating profit for the third quarter. Although revenue came in ahead of expectations, boosted by contributions from Uber's membership program, the company noted that regulatory and legal challenges weighed on profitability. 

Henry Schein (HSIC), a distributor of medical and dental equipment, exceeded estimates with its third-quarter revenue and adjusted profit, and its shares surged 11%. The company pointed to market share gains in its distribution business, raised its full-year adjusted profit forecast, and announced a cost-savings plan that included automation initiatives and boosting sales of its own branded products.

Shares of Expeditors International of Washington (EXPD) jumped 11% after the logistics company surpassed top- and bottom-line estimates for the third quarter. Strength in the company's air-freight business helped offset softness in the ocean-freight market.

Specialty chemicals company DuPont de Nemours (DD) completed the spinoff of its electronics business into the independent company Qnity Electronics (Q). DuPont stock jumped 8.9%, while Qnity shares gained 4.2% on their first day of trading. Qnity is now an S&P 500 component; DuPont remains one after the spinoff.

Fast-food giant Yum! Brands (YUM) beat quarterly sales and profit estimates, highlighting strong demand from Taco Bell, and its shares jumped 7.3%. The company also said that it was evaluating strategic options for its Pizza Hut business, which has faced headwinds in recent years.

Anna Rose Layden/Bloomberg

Most of the activity at the United States capitol has ground to a halt.

KEY TAKEAWAYS

• At 36 days, this is the longest government shutdown in U.S. history.
• This year’s shutdown affects all government agencies and statistical services, whereas previous shutdowns were only partial since some agencies were funded by Congress.
• Several key economic reports have been delayed by the shutdown, including the jobs report, inflation data and retail sales report.

It’s a government shutdown like no other.

It's the 36th day of the government shutdown that began on Oct. 1, making it the longest government shutdown in U.S. history. Prior to this, the longest shutdown had been 35 days in 2018. That wasn’t a full government work stoppage like this one, since some government agencies were funded through congressional appropriations before that shutdown began.

The shutdown has halted the flow of key economic data from the government that's used by economists, policymakers and businesses to make critical decisions. Reports from statistical agencies like the Census Bureau, Department of Labor, and Department of Agriculture are all on hold because they lack the staffing to administer the surveys and data collection.

Why This Matters To The Economy

The longest U.S. government shutdown in history presents another significant threat to the economy alongside headwinds from tariffs, immigration and inflation. The longer investors and officials go without key economic data, the greater the risk of making mistakes based on outdated or imperfect information.

So far, the shutdown has delayed October releases on U.S. employment levels, retail sales and new home sales. It’s also likely to delay another release of the U.S. jobs report, which was originally scheduled for Friday.

The current shutdown is poised to continue for days or even weeks, according to betting market Polymarket. The prediction market found that 70% of respondents expect the standoff to continue until Nov. 15.

Here’s a list of all the government reports that have been delayed by the shutdown.

Data Drought: The list of unreleased government reports grows longer as the showdown drags on.DateReportStatistical AgencyOct. 1Construction SpendingCensus BureauOct. 1Grain CrushingsDepartment of AgricultureOct. 1Fats and OilsDepartment of AgricultureOct. 2 Motor Vehicle SalesBureau of Economic AnalysisOct. 2Export SalesDepartment of AgricultureOct. 2Weekly Jobless ClaimsDepartment of LaborOct. 2Factory OrdersCensus BureauOct. 3Employment SituationBureau of Labor StatisticsOct. 6Crop ProgressDepartment of AgricultureOct. 7International Trade in Goods and ServicesBureau of Economic AnalysisOct. 8Business FormationCensus BureauOct. 9Weekly Jobless ClaimsDepartment of LaborOct. 9Export SalesDepartment of AgricultureOct. 9Wholesale Sales and Inventories (Preliminary)Census BureauOct. 9Supply/Demand (agricultural products)Department of AgricultureOct. 9Crop ProductionDepartment of AgricultureOct. 14Crop ProgressDepartment of AgricultureOct. 15Real EarningsBureau of Labor StatisticsOct. 16Weekly Jobless ClaimsDepartment of LaborOct. 16Producer Price IndexBureau of Labor StatisticsOct. 16Retail SalesCensus BureauOct. 17Export SalesDepartment of AgricultureOct. 17Import and Export PricesBureau of Labor StatisticsOct. 17Housing StartsCensus BureauOct. 17Industrial ProductionFederal ReserveOct. 17Treasury International CapitalTreasury DepartmentOct. 20Crop ProgressDepartment of AgricultureOct. 23Weekly jobless claimsDepartment of LaborOct. 23 Export salesDepartment of AgricultureOct. 24 Cattle on feedDepartment of AgricultureOct. 24Cold storageDepartment of AgricultureOct. 24New home salesCensus BureauOct. 27Durable-goods ordersCensus BureauOct. 27Crop progressDepartment of AgricultureOct. 29Advanced U.S. trade Balance in GoodsCensus BureauOct. 29Advanced Retail InventoriesCensus BureauOct. 29Advanced Wholesale InventoriesCensus BureauOct. 30Weekly Jobless ClaimsDepartment of LaborOct. 30Q3 Gross Domestic ProductBureau of Economic AnalysisOct. 30Export SalesDepartment of AgricultureOct. 31Personal Consumption Expenditure IndexBureau of Economic AnalysisOct. 31Q3 Employment Cost IndexBureau of Labor StatisticsOct. 31Farm PricesDepartment of AgricultureNov. 3Construction SpendingCensus BureauNov. 3Export InspectionsDepartment of AgricultureNov. 3Crop ProgressDepartment of AgricultureNov. 3Grain CrushingsDepartment of AgricultureNov. 3Fats and OilsDepartment of AgricultureNov. 4Trade BalanceCensus BureauNov. 4Factory OrdersBureau of Labor StatisticsNov. 4Job OpeningsBureau of Labor Statistics

Correction, Nov. 5, 2025: A previous version of this story incorrectly stated the number of days the government had been shut down.

Update, Nov. 5, 2025: This article has been updated with new information from Polymarket.

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Palantir's stock tumbled Tuesday despite strong quarterly results from the AI software company amid worries the stock's torrid rally this year has left it overvalued

Key Takeaways

• Palantir shares plunged to lead tech stocks lower a day after the AI software maker posted record revenues that blew past analysts' expectations and boosted its outlook.
• While longtime bulls said they were encouraged by the strong results, several analysts reiterated worries the stock could be overvalued.

Data analytics software maker Palantir is seeing "otherworldly" growth as companies and governments clamor for its flagship Artificial Intelligence Platform, its CEO told investors yesterday. So why is its stock suffering today?

Shares of Palantir Technologies (PLTR) were down 9% around $189 in recent trading, making it one of the leading decliners on the S&P 500 and Nasdaq, a day after the company posted record revenues that blew well past analysts' expectations and boosted its full-year outlook for the third straight quarter.

Despite the strong results, several Wall Street analysts said they worry Palantir's stock could be overvalued after a torrid rally this year. Even with Tuesday's losses, the shares are up some 150% this year, leaving it among the best-performing stocks in the S&P 500 for 2025.

Why This Matters for Investors

Palantir's slump comes amid growing worries about an AI bubble, pressuring tech stocks and the major indexes Tuesday. Recents comments from Goldman Sachs and Morgan Stanley executives suggesting the market could be due for a pullback also weighed on sentiment.

Jefferies analysts said Palantir's "numbers are great" but called its valuation "extreme" relative to its fundamentals in a note to clients Tuesday. They issued a price target of $70, less than half of its current value.

Analysts at William Blair and UBS, who have neutral ratings for the stock, also voiced concerns Palantir’s valuation would make it one of the more expensive names in software on a free cash flow basis, despite the better-than-expected quarterly results.

Still, longtime bulls at Wedbush led by Dan Ives stood by the stock, saying they were encouraged by the "eye popping" results, and that they'd be buyers of any near-term weakness on a "this is as good as it gets" reaction from the market, with a $230 price target. Bank of America analysts were even more bullish, and bumped their target up to a Street high of $255 from $215, calling Palantir a "best-in-class AI enabler."

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David Solomon, CEO of Goldman Sachs, during the Global Financial Leaders' Investment Summit in Hong Kong.

Key Takeaways

• The CEOs of Goldman Sachs and Morgan Stanley warned at a panel on Tuesday that the stock market is likely to experience a correction within the next year or two.
• Their comments spoke to the concerns of some on Wall Street that stock valuations are too high and an AI bubble is forming.
• Bank executives, despite their warnings of a possible drawdown, remain optimistic about the stock market's outlook.

Some big Wall Street bosses see a stock pullback coming. That doesn't mean they're panicking.

Goldman Sachs CEO David Solomon and Ted Pick, of Morgan Stanley, spoke Tuesday during a panel in Hong Kong. Solomon said a 10% to 20% drawdown in equity markets was "likely" in the "next 12 to 24 months," while Pick suggested that investors should "welcome the possibility" of a 10% to 15% pullback that "are not driven by some macro cliff effect.” (Solomon was reiterating comments made in early October at a conference in Italy.)

Investors didn't like the sound of that, and markets retreated Tuesday.

Why This Is Significant

Wall Street has become concerned in recent months that the AI investment propelling the stock market to new highs and driving economic growth is also fueling a stock bubble. A brief correction could ease some of those concerns by lowering valuations and resetting investor expectations.

The comments were heeded on Wall Street. The tech-heavy Nasdaq Composite dropped nearly 2% when markets opened on Tuesday, and was recently down about 1.6% amid a broad stock slump. AI stocks with high valuations were among those hardest hit. Software maker Palantir (PLTR) dropped 8% despite blowing past estimates and raising its full-year guidance in its third-quarter earnings report yesterday.

But that doesn't mean it's time to flee, according to Solomon. "None of us are market timers," he said of his Goldman Sachs colleagues on Tuesday. The firm's advice, he said, is to "look at your portfolio allocation and stay invested. And that advice has served people well."

Wall Street Increasingly Nervous About AI Bubble

Tuesday's pullback reflects increasing investor anxiety about the stock market, which has soared to record highs this year despite a litany of economic and geopolitical risks. Big data center and cloud computing deals, meanwhile, have raised concerns that the U.S. is barreling toward a second Dotcom Bubble, when telecommunications companies and investors overestimated how quickly the internet would be commercialized, leading to a glut of infrastructure and stratospheric stock valuations. 

And Pick and Solomon aren't alone in their concerns. In October, JPMorgan Chase CEO Jamie Dimon said a substantial pullback could happen in the next six months to two years, a risk he said the market was underestimating. Fed Chair Jerome Powell nodded to valuation concerns when he called the stock market “fairly highly valued” in September.

“Valuation models indicate that risk asset prices are well above fundamentals, increasing the probability of disorderly corrections when adverse shocks occur,” according to a recent report from the International Monetary Fund.

That such a view isn't unanimously shared has supported stocks. Some Wall Street analysts note that the tech companies driving today’s AI investments are far more financially secure—and more fairly valued—than those behind the Dotcom boom.

Other bubble skeptics point to interest rates, which the Federal Reserve is expected to lower over the next year, stimulating the economy and preventing the kind of credit crunch that could pop an asset bubble. 

Stocks In 'Pretty Constructive Environment,' Says Goldman's Solomon

While bank execs acknowledge stock valuations are stretched, they maintain that the outlook for markets currently skews more positive than negative. “Investors want to take risk, so I’d say the overall environment feels pretty good going forward,” said Pick. 

Tech valuations “are kind of 80th percentile in historical context," Solomon said. "But when you look at the broad market there are lots of things where the multiples aren’t as full, especially given earnings growth.”

Stimulative fiscal policy in most developed markets would also be a tailwind for stocks, he added. “So I think it’s a pretty constructive environment," said Solomon. "I could give you lots of things that could go wrong, but at the moment those don’t seem likely in the short-term distribution of outcomes." 

Solomon also noted that financial bubbles can inflate for a long time. Former Fed Chair Alan Greenspan, he said, warned of “irrational exuberance” in the stock market in 1996, more than three years before the Dotcom Bubble finally burst. 

"Are valuations too high? They are always too high," CNBC's Jim Cramer wrote earlier today on X.