U.S. stock futures edged lower ahead of the final full week of 2025, as a broad rotation out of AI-focused equities weighed on major tech indices. The sell-off was led by declines in top AI performers including NVIDIA and Apple.
- NVIDIA (NVDA) dropped 4.8%, leading the tech sector's decline.
- Apple (AAPL) fell 1.9% amid demand and competitive pressures.
- Microsoft (MSFT) and Alphabet (GOOGL) declined 1.6% and 1.3% respectively.
- The Nasdaq Composite saw a 1.2% pre-market drop, signaling tech weakness.
- Rotation into value sectors such as financials and energy is gaining momentum.
- Year-end portfolio rebalancing and profit-taking are key drivers of the shift.
Markets opened the final full week of 2025 with muted gains, as tech-heavy indices showed notable weakness. The Nasdaq Composite fell 1.2% in pre-market trading, with the S&P 500 futures dropping 0.4%. The sell-off was concentrated in high-flying AI-related stocks, which have led market gains through much of the year. NVIDIA (NVDA) declined 4.8%, erasing gains from recent quarters, while Apple (AAPL) slipped 1.9% amid concerns over slowing iPhone demand and increased competition in generative AI. Microsoft (MSFT) and Alphabet (GOOGL) also saw declines of 1.6% and 1.3%, respectively, as investors reassessed valuations in light of elevated interest rates and profit-taking momentum. The rotation trade reflects a shift toward value-oriented sectors, with financials and energy stocks showing relative strength. This shift comes after AI-driven growth stocks posted double-digit gains for much of 2025, raising concerns about overvaluation. The move follows a pattern seen in previous years, where investors lock in profits ahead of year-end rebalancing and tax considerations. With the S&P 500 approaching record highs, the pullback in tech suggests growing caution around sustainability of recent gains. The outperformance of non-tech sectors could influence ETF flows and index weighting. Funds tied to the Nasdaq-100 and broader technology benchmarks may see net redemptions, while value-focused ETFs could experience inflows. The shift also impacts institutional positioning, as asset managers adjust portfolios ahead of calendar year-end reporting cycles. Analysts note that while the correction is sharp, it may be a healthy recalibration rather than a sign of broader market stress.