Stocks fell on Tuesday, pressured by declines in artificial intelligence-related names like Palantir, as investors grow increasingly concerned about valuations in the bull market-leading shares.

The S&P 500 declined 1.17% to close at 6,771.55, while the Nasdaq Composite traded down 2.04% to finish at 23,348.64. The Dow Jones Industrial Average lost 251.44 points, or 0.53%.

Palantir shares shed 8%, even after the software company beat Wall Street's estimates for the third quarter and gave strong guidance, fueled by growth in its artificial intelligence business. The stock, which has risen more than 150% this year, trades at more than 200 times forward earnings. That means investors in that name and the other AI stocks expect the companies to keep ratcheting up their profit and revenue forecasts by large magnitudes in order to justify investors continuing to buy the shares.

Oracle, which sports a forward P/E of 35, moved 4% lower, chipping away at its almost 50% gain this year. Chipmaker AMD, which has more than doubled this year, lost nearly 4%. Other AI stocks such as Nvidia and Amazon pulled back as well.

AI stock gains have driven the S&P 500's forward price-earnings ratio to above 23, near its highest level since 2000, per FactSet. As those stocks have lifted the broader market to new heights in recent months, Anthony Saglimbene of Ameriprise said in an interview with CNBC that without a pullback, valuations are beginning to get "really stretched."

"We haven't really seen any major corrections or any real pressure on stocks since April," the firm's chief market strategist said. "Profits are good, but I think investors are starting to ask themselves, based on the pace of [capital expenditure] investments from some of these key Big Tech companies, 'Are you going to see the profit growth over the next year to justify the levels of capex?'"

Comments from chief executives at Goldman Sachs and Morgan Stanley added to the loss of confidence among investors Tuesday. Overnight, Goldman's David Solomon said it's "likely there'll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months." Additionally, Morgan Stanley CEO Ted Pick said: "We should also welcome the possibility that there would be drawdowns, 10 to 15% drawdowns that are not driven by some sort of macro cliff effect."

"Fundamentals are still good, but I would fully expect that you're going to see a little bit of some periods of pullback," Saglimbene said. "Whether that leads to a 5% or 10% or 15% correction by the end of the year, we'll have to see."

Wall Street is coming off a mixed session, as the S&P 500 and Nasdaq both ended Monday higher, while the Dow fell more than 200 points. More than 300 stocks in the broad-market index closed in the red in the previous session, adding to concerns about weak breadth and high levels of tech concentration — particularly after the number of S&P 500 stocks that gained last month was smaller than the amount that declined.

"Breath in the market has been pretty narrow for the last several months," Saglimbene said. "If there is a slowing momentum or a near-term downturn in AI or tech, there really [aren't] other areas that have performed as well, and if we don't have a lot of clear data on the economy, and profitability across the rest of the S&P 500 isn't as strong, where do you go?"