The Nasdaq 100 Index fell into a 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 0.9% to 23,381.39, pushing the index down 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. 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 18% 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.
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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