Nvidia (NVDA), Tesla (TSLA) and other tech stocks fell across the board Tuesday as President Trump’s escalation of trade war threats to Europe shook markets.
Shares in AI chipmakers Nvidia and Broadcom (AVGO) dropped more than 3%. Tesla (TSLA) and Amazon (AMZN) sank nearly 3%, while Meta (META), Alphabet (GOOGL), and Apple (AAPL) dipped almost 2%.
Oracle (ORCL) — the AI cloud provider carrying debt precariously close to junk-bond status — saw shares decline around 4%. Meanwhile, Nvidia-backed emerging AI cloud firms Nebius (NBIS) and CoreWeave (CRWV) shed over 6% and 4%, respectively.
Overall, the tech-heavy Nasdaq Composite’s (^IXIC) 1.7% drop led major indexes down Tuesday to start a holiday-shortened trading week after Trump doubled down on his threat to occupy Greenland and add new tariffs on European nations. The moves added to the risk of dooming the United States’ 80-year old diplomatic alliance with the continent, ahead of a meeting of world leaders at the World Economic Forum in Davos.
Tuesday’s tech selloff fit the usual playbook of investors rotating out of riskier bets during a market drawdown. But the slide also highlighted continued unease from investors as they worry over a potential AI bubble, analysts told Yahoo Finance.
Although a rosy outlook on the AI market from chip manufacturer TSMC (TSM) helped boost tech names last week, the Magnificent Seven stocks have lagged major indexes so far in 2026. According to Bloomberg data, the group of Big Tech stocks has collectively dropped more than 3% in January, while the Nasdaq Composite is just below the flatline and the S&P 500 (^GSPC) is fractionally positive over the same period.
Noting the “massive underperformance” of large cap tech stocks in the last several weeks, Hedgeye Risk Management analyst Sam Rahman said: “There’s been so much spending on AI-related capex … investors are clearly concerned about what returns they’re gonna get from all the spending.”
Meanwhile, Wedbush analyst and tech bull Dan Ives saw Tuesday’s pullback as a buying opportunity, writing in a note to clients: “The back and forth war of words between Trump and the EU will give investors another opportunity to own the tech winners and despite the bears always trying to yell fire in a crowded theater……the AI Revolution is still in the early days of playing out.”
More will be revealed about how industry giants are monetizing their AI investments as tech earnings begin in earnest over the next few weeks. On deck this week is Intel, while megacaps Tesla, Meta, and Microsoft will kick off reports from the Magnificent Seven on Jan. 28.
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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