European stocks fell sharply on Tuesday, tracking Wall Street's declines overnight amid renewed concerns about soaring valuations of technology firms ahead of earnings announcements from AI favorite Nvidia.

At 11:05 AM Saudi time, the DAX index in Germany fell by 1.3%, the CAC 40 index in France fell by 1.3%, and the FTSE 100 index in the United Kingdom also fell.

Doubts about AI-related assessments

Global sentiment surrounding artificial intelligence trading continued to deteriorate amid growing concerns about valuations, prompting investors to dump shares of major technology companies ahead of Nvidia's (NASDAQ:NVDA) quarterly results announcement on Wednesday.

The Dow Jones Industrial Average fell more than 500 points, or 1.2%, on Monday, while the S&P 500 and the technology-focused NASDAQ Composite also declined.

According to Sundar Pichai, president of Alphabet, Google's parent company, in an interview with the BBC, every company will be affected if the AI bubble bursts.

Pichai said that the growth in AI investments was an extraordinary moment, but there is some irrationality in the current AI boom.

These concerns emerged ahead of the release of quarterly results by tech giant Nvidia, scheduled for later this week. The company has been at the center of a meteoric rise in valuations, fueled by artificial intelligence, over the past three years, though questions have arisen about the nature of this surge in recent months.

US data begins to appear

There is little European economic data due out on Tuesday, so most of the focus will be on the US as the federal government reopens, allowing key data to reappear.

U.S. factory orders for August are due later in the session, but the main focus will be on Thursday's non-farm payrolls data for September, for further clues about the health of the labor market, a key consideration for the Federal Reserve.

Federal Reserve Governor Christopher Waller pointed to risks to the labor market on Monday, urging policymakers to approve another quarter-point interest rate cut at the next policy meeting on December 9-10.

These comments come amid declining bets that the Federal Reserve will cut interest rates in December. Markets are now pointing to roughly a 40% probability of a 25-basis-point cut at the Fed's December 10-11 meeting, down from 55% last week, according to the CME Fedwatch index.

Imperial Brands reports a jump in operating profit

In Europe, tobacco giant Imperial Brands (LON:IMB) reported an almost 5% increase in adjusted annual operating profit, boosted by higher tobacco product prices and increased demand for smoking alternatives.

British housebuilder Crest Nicholson (LON:CRST) expects its annual profit to come in at the lower end of its previous guidance range, or slightly below, citing a sluggish housing market over the summer and uncertainty over government tax policy ahead of the next budget.

Elsewhere, Akzo Nobel (AS:AKZO), the maker of Dulux coatings, said it plans to merge with paint company Axalta Coating Systems (NYSE:AXTA) in a deal that will create a combined company with a market capitalization of $25 billion.

Crude oil prices fell as Russian port activity resumed.

Oil prices fell as supply concerns eased after activity resumed at Russia’s main export hub following an attack by Ukrainian drones and missiles.

Brent crude futures fell 0.9% to $63.64 a barrel, and U.S. West Texas Intermediate crude futures dropped 1% to $59.29 a barrel.

Russia's Novorossiysk oil port resumed loading on Sunday after a two-day suspension due to the attack.

Exports from Novorossiysk and the nearby Caspian Sea pipeline terminal together represent about 2.2 million barrels per day, or roughly 2% of global supply.