AI Euphoria Cools | Markets Pull Back | Pfizer Disappoints | Denny’s Cashes Out

The afternoon followed through on the morning’s warnings. What began as hesitation turned into retracement as traders abandoned crowded AI trades and rotated into safety.

The S&P 500 ended down more than a percent, the Nasdaq deeper still, confirming that the rally’s leadership finally hit resistance. Palantir’s slide, symbolic and sharp, kept pressure on the sector as investors began treating valuation as risk instead of reward.

Momentum faded across the AI complex: Nvidia, AMD, and Amazon extended declines, while Oracle lost ground after a long stretch of outperformance. The sentiment shift was less panic than exhaustion, a broad exhale after months of one-way optimism. By midday, even early dip-buyers had stepped back, leaving afternoon trading thin and defensive.

Elsewhere, weakness in Pfizer and Ford underscored how uneven this earnings season has become. Beats built on cost cuts failed to impress, and post-credit EV fatigue added to the drag.

The labor narrative didn’t help either, as reports of corporate layoffs and AI-linked rationalizations clouded the macro picture.

Only a handful of names swam against the tide: Denny’s surged on its take-private deal, a rare reminder that private capital still sees value where public markets don’t.

But that enthusiasm couldn’t offset the rotation toward cash, dividends, and defensives.

Investor Signal

The pullback is more confirmation instead of surprise. The market is entering a digestion phase where enthusiasm is cooling into evaluation.

AI and growth will reclaim the narrative, but not before earnings, demand, and power costs prove the math works.

For now, capital is trading clarity for caution.

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Palantir CEO Alex Karp fired back at “Big Short” legend Michael Burry, calling him “bats--- crazy” after filings showed Burry’s Scion Asset Management held nearly $1.1 billion in put options against Palantir and Nvidia.

The tirade came hours after Palantir reported another double-beat quarter with revenue above $1 billion and raised guidance, only to then see its stock sink 8% on valuation fears.

Nvidia also slipped 3%, extending the week’s pullback in AI-linked equities. For Karp, the selloff is less about fundamentals and more about what he branded “market manipulation.”

Burry’s silence speaks louder. His cryptic X post, “Sometimes the only winning move is not to play,” hinted at renewed skepticism toward the AI trade that’s dominated 2025.

With Palantir’s forward P/E north of 250 and Nvidia’s around 35, even true believers concede valuations are stretched. Yet Karp’s public attack marks a rare cultural moment: a CEO sparring with the market’s most famous contrarian, both symbols of extreme faith versus doubt.

Wall Street remains split. Goldman Sachs praised Palantir’s execution but called expectations “fully priced.”

Jefferies and RBC echoed similar caution, noting growth remains heavily front-loaded around U.S. enterprise AI demand. Palantir’s problem isn’t profitability, but it is perception.

When the story for narrative stocks gets stale, even strong results can’t outrun gravity.

Deeper Read: When Conviction Becomes the Asset

This clash crystallizes the psychology of the AI trade.

On one side: founders selling inevitability; on the other, skeptics betting on reversion.

Both narratives thrive on conviction, and both can break when valuations lose tether to fundamentals. Burry’s short isn’t anti-AI; it’s anti-euphoria. Karp’s defense, meanwhile, reflects how existential this cycle feels for companies priced for perfection.

What happens next will hinge on whether AI’s revenue impact scales with its rhetoric.

Investor Signal:

The AI boom’s second act will reward execution instead of evangelism. Investors should separate growth from glamour and treat earnings momentum as the only proof that matters.

Valuations above 200x forward earnings leave no room for error... or ego.

Stay long innovation, but hedge the story stocks.

A wave of corporate layoffs is rippling through America’s boardrooms, and this time, the scapegoat wears a neural net.

Amazon, UPS, and Target have collectively cut more than 60,000 jobs this year, blaming everything from “efficiency” to “AI transformation.” The irony: while executives cite artificial intelligence as the driver of new productivity, few can prove it’s actually replacing human labor at scale.

Instead, what’s emerging is a classic corporate cycle of margin defense, with AI as the convenient narrative gloss.

At Amazon, Andy Jassy’s “world’s largest startup” rhetoric masks a second major restructuring in three years, trimming 14,000 corporate roles as the company doubles down on AI cloud infrastructure.

UPS has eliminated 48,000 jobs, largely due to a pivot away from low-margin Amazon shipments and the closure of 93 buildings. Automation may soften hiring, but it’s not the executioner.

Target’s 1,800 cuts reflect softening consumer demand and rising tariff pressure, not machine learning breakthroughs. Across industries, the pattern repeats: a mix of cost-cutting, macro caution, and “AI-washing,” attributing painful human layoffs to innovation instead of contraction.

The backdrop is unnerving.

The Bureau of Labor Statistics remains dark amid a government shutdown, leaving markets to extrapolate from corporate filings.

Inflation lingers, delinquencies are up, and consumer sentiment is down, yet equity indices hover near record highs, buoyed by AI megacaps. Analysts call it a paradox of confidence: firms are cutting aggressively while the market keeps rewarding them for looking “disciplined.”

The layoffs may not mark an AI recession yet, but they signal the return of corporate Darwinism under a new name.

Deeper Read: The Illusion of Efficiency

What’s happening isn’t automation, it’s rationalization. Companies are invoking AI to reprice their labor models before a slowdown does it for them.

“AI-washing” masks the cyclical nature of these cuts, framing them as technological inevitability instead of strategic retreat. It’s cheaper to blame innovation than admit overexpansion.

The real story is that efficiency is being rebranded as intelligence, and cost-cutting as transformation.

Investor Signal:

Ignore the AI alibi.

These layoffs flag slowing consumer demand, cautious corporate sentiment, and pre-emptive margin protection before a potential earnings dip.

Investors should watch for declining payroll growth and rising capital expenditures, a telltale shift from labor to infrastructure.

In portfolios, favor firms using AI to expand revenue, not excuse retrenchment. The smartest capital now moves where “efficiency” still translates into growth.

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Shares of Denny’s Corp (DENN) surged nearly 50% Tuesday after the diner chain agreed to be taken private in a $620 million all-cash acquisition by TriArtisan Capital Advisors, Treville Capital Group, and Yadav Enterprises, one of its largest franchisees.

The buyout ends a bruising run for the diner chain, which has struggled with weaker foot traffic, higher costs, and thinning margins across the casual dining space.

CEO Kelli Valade said the company had fielded interest from dozens of potential buyers before settling on the deal she called the “best path forward” for shareholders.

The decision to leave public markets reflects a broader shift among mid-sized consumer brands opting for privacy over public scrutiny. Quarterly earnings cycles and volatile sentiment have been punishing to companies caught between slow growth and rising wage expenses.

Going private gives Denny’s room to streamline operations, focus on digital transformation, and invest in menu innovation away from the pressures of Wall Street expectations.

The move also adds to a growing list of take-private deals this year, a sign that private equity sees value where public markets have turned impatient.

For long-time investors, it’s an exit wrapped in nostalgia: one of America’s most recognizable breakfast brands finding its next chapter off the exchange.

Deeper Read: The Return of Private Capital

Denny’s move underscores a broader pivot toward privatization as public markets punish mid-cap consumer names for cyclical softness.

Cheap financing and abundant private capital are fueling a wave of takeouts where investors see more value away from Wall Street’s quarterly spotlight.

For Denny’s, life as a private entity means room to restructure quietly, and to survive the restaurant sector’s tightening margins.

Investor Signal:

Public-to-private conversions are accelerating in 2025, often delivering double-digit premiums for shareholders of undervalued mid-caps.

Expect more bids in consumer, restaurant, and software verticals where multiples have compressed but cash flow remains stable.

For investors, the playbook is clear: accumulate quality small caps with brand equity before private equity does.

After a record September, electric vehicle momentum slipped hard in October as the expiration of federal tax credits took its toll.

Ford, Hyundai, and Kia all reported double-digit drops in EV deliveries, with Ford’s Lightning pickups and Mach-E crossovers leading the decline. Hyundai’s Ioniq lineup saw some of the steepest pullbacks, underscoring how much the incentive cliff distorted short-term demand.

Automakers that had raced to push units before the September 30 deadline are now managing a hangover of front-loaded sales and cautious buyers.

Without the $7,500 incentive cushioning sticker shock, average EV transaction prices jumped meaningfully last month. Consumer appetite cooled, but not out of interest... out of reach.

Dealers and analysts are calling this the “reset period,” where buyers who rushed to capture credits are now sitting out, and manufacturers must adjust pricing strategies or face inventory pressure.

Some brands, like Hyundai, framed the pause as temporary, expecting equilibrium once pricing stabilizes and next-generation models enter showrooms.

The drop isn’t evenly distributed. High-end EVs are holding up better than mass-market ones, as affluent buyers remain less sensitive to credit loss.

Still, the broad deceleration suggests the U.S. EV story remains dependent on subsidies, not yet self-sustaining on market fundamentals. Automakers face a quarter of margin compression and market recalibration before policy clarity returns.

Deeper Read: The Subsidy Hangover

The EV slowdown is less about waning interest than affordability fatigue. Incentives accelerated adoption but also inflated expectations, leaving automakers exposed once the artificial lift vanished.

October’s slump highlights how price elasticity, not technology, defines this phase of the transition.

Until infrastructure, cost, and consumer trust align, EV growth will remain cyclical and policy-bound.

Investor Signal:

EV equities are entering a consolidation phase.

Watch automakers with diversified portfolios, those balancing hybrids and combustion sales while scaling battery platforms efficiently.

Momentum will return, but only when incentives evolve from temporary boosts to structural demand drivers. In the meantime, valuation discipline trumps thematic enthusiasm.

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Pfizer reported results that looked strong on paper but failed to inspire confidence where it matters.

Adjusted earnings topped forecasts and revenue nudged past expectations, yet the upside came from cost discipline and tax relief. The company’s major products underperformed, and its high-profile cancer drugs from the Seagen acquisition delivered disappointing quarters.

Even with the beat, shares slipped as investors saw a familiar story: a giant still searching for its next act.

Eliquis, its blood thinner partnership with Bristol Myers, was one of the few bright spots, but that lifeline is temporary. The drug faces price pressure once Medicare’s negotiation program takes effect next year, followed by generic competition later in the decade.

Meanwhile, sales of COVID-19 treatments continue to decay, and Pfizer’s attempts to pivot toward obesity therapies remain uncertain amid legal friction with Novo Nordisk over Metsera.

Management framed the weaker oncology sales as a one-off timing issue tied to distribution changes, but the market wasn’t buying the reassurance.

Cost controls kept margins intact, yet they also underscored how little organic growth is left in the core portfolio. The company narrowed guidance, signaling limited flexibility ahead of a steep patent cliff.

The beat was numerical; the sentiment was not.

Deeper Read: Earnings Without Evolution

Pfizer’s quarter highlights the transition from pandemic windfall to post-COVID stagnation.

Revenue strength driven by legacy drugs and accounting tailwinds means a pause before reinvention. Investors want evidence of new growth engines, not operational maintenance.

Until the pipeline yields a breakthrough, the stock remains trapped between stability and decline.

Investor Signal:

Focus shifts from earnings to innovation.

Investors should look for signs of R&D acceleration, portfolio reshaping, or acquisitions that fill the late-decade gap. Cost cuts can protect margins for a while, but without fresh catalysts, valuation compression will persist.

In big pharma, the next growth wave belongs to whoever escapes their patent cliffs first.

Today didn’t break the market, it simply reminded it what gravity feels like.

The AI trade, once immune to scrutiny, is now behaving like every other cycle: profits matter, positioning matters, and hype has a half-life. Investors who spent months chasing growth at any price are now confronting what happens when optimism meets arithmetic.

That’s recalibration.

The broader tone heading into midweek is pragmatic. Liquidity remains deep, earnings aren’t collapsing, and capital still wants exposure to innovation... just with discipline.

The pullback was overdue, and maybe even healthy. If the AM session was hesitation and the PM was retreat, tomorrow will test whether confidence can reset without another correction.