The Nasdaq 100 Index fell into correction territory on Friday amid a deepening slump in the shares of technology giants that have powered the bull market for most of the past three years.
The tech-heavy benchmark fell 1.1% to 23,335.13, pushing the index down about 11% from a peak in October. It’s the first time since US President Donald Trump’s tariffs sent stocks plunging in April 2025 that the Nasdaq 100 has fallen into a technical correction, which is defined as a decline of at least 10% but short of a bear market plunge of 20%.
The index’s selloff comes as the Iran war rattles investor confidence at the same time Big Tech companies are facing mounting skepticism about massive spending on artificial intelligence computing and the outlook for when those investments will start generating bigger returns.
“We’re reacting to a lot of headlines, and the geopolitical situation is overshadowing everything else,” said Jim Awad, senior managing director at Clearstead Advisors. “In the short term, tech has had negative leadership.”
Microsoft Corp. and Meta Platforms Inc. — two of the heaviest spenders — are among the biggest drags on the Nasdaq 100 since it peaked on Oct. 29. Since then, Microsoft is down 34% while Meta Platforms has fallen 29%; the Facebook parent has also recently sold off on legal issues.
It isn’t just the lavish spenders, however, that are getting pummeled. Nvidia Corp., the biggest beneficiary of the largess, has dropped almost 19% since Oct. 29. The chipmaker is grappling with investor fears that its booming revenue growth from the sale of AI accelerators won’t last.
At the same time, anxiety about AI-related disruption has weighed heavily on software makers, as well as other sectors. Workday Inc., which makes human resources software, and Trello-owner Atlassian Corp., have seen their shares drop more than 40% since Oct. 29.
Despite leading the selloff, tech giants are still viewed positively by Wall Street with earnings growth expected to outpace the rest of the S&P 500 this year and stock valuations more attractive than they were several months ago.
“Tech has gotten very cheap relative to both its own history, and relative to the market,” Awad said. “When the market turns, it will turn viciously, and I think you’ll see these stocks really move higher, because not only are they cheap and look attractive, but they are the best positioned to prosper over the long-term, given their growth and AI.”
The so-called Magnificent Seven — Nvidia, Microsoft, Apple Inc. Alphabet Inc., Amazon.com Inc., Meta and Tesla Inc. — are projected to deliver profit growth of 19% in 2026, according to data compiled by Bloomberg Intelligence. By contrast, the other 493 companies in the S&P 500 are expected to see earnings expand by 16%.
The Nasdaq 100 is priced at 21 times estimated earnings, down from a peak of 28 times in October and a slight discount to its average over the past decade.
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Maybe Ron K and DJT can negotiate our way out of this.
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Facts Only
The Nasdaq 100 Index fell into correction territory on Friday, a decline of approximately 11% from its October peak.
This is the first time since April 2025 that the index has fallen into a technical correction.
The selloff in the index is due to geopolitical tensions and skepticism about tech companies' massive spending on artificial intelligence computing.
Microsoft Corp., Meta Platforms Inc., and Nvidia Corp. are among the biggest drags on the Nasdaq 100 since its October peak.
Microsoft is down 34% while Meta Platforms has fallen 29%; the Facebook parent has also recently sold off on legal issues.
Nvidia Corp. has dropped almost 19% since October, grappling with investor fears that its booming revenue growth from the sale of AI accelerators won't last.
Executive Summary
The Nasdaq 100 Index, a tech-heavy benchmark, entered correction territory on Friday, marking a decline of approximately 11% from its October peak. This is the first time since April 2025 that the index has fallen into a technical correction, defined as a drop of at least 10%. The selloff in the index can be attributed to both geopolitical tensions and mounting skepticism about tech companies' massive spending on artificial intelligence computing.
The fall in the Nasdaq 100 is predominantly due to the performance of its heavyweight components, such as Microsoft Corp., Meta Platforms Inc., and Nvidia Corp., which have seen significant drops since October. These companies are facing investor concerns about their spending and the outlook for returns from AI investments.
Full Take
The article presents a narrative that the Nasdaq 100 Index, which is heavily influenced by tech giants, has entered correction territory due to a combination of geopolitical tensions and skepticism about these companies' massive spending on AI computing. The focus is on the declining share prices of Microsoft Corp., Meta Platforms Inc., and Nvidia Corp. since October.
Patterns detected: ARC-0043 Motte-and-Bailey, ARC-0024 Ambiguity
The underlying paradigm driving this narrative is the vulnerability of tech stocks, particularly those investing heavily in AI, to external factors such as geopolitical tensions and investor sentiment. The assumption goes unstated that these companies' future growth and profitability are dependent on their AI investments.
If this trend continues, it could have significant implications for the tech industry, with investors potentially rethinking their allocations to tech stocks, particularly those heavily investing in AI. This could lead to further market volatility and impact companies' growth strategies.
What role do geopolitical tensions play in the current downturn of tech stocks?
How can tech companies manage investor expectations regarding their AI investments?
What long-term implications does this correction have for the tech industry and the broader market?
A potential coordinated influence campaign could aim to exacerbate fears about the future of tech companies, particularly those investing in AI. This could be done by selectively highlighting negative news or emphasizing the risks associated with these investments. However, the article does not demonstrate clear structural alignment with such a playbook.
Sentinel — Human
The text shows signs of being human-written, with variable sentence length, passionate and idiosyncratic emphasis, and an unsupported phrase that may indicate a non-standard writing style. However, the presence of an unusual phrase suggests a potential lack of editorial oversight.