(Bloomberg) -- The Nasdaq 100 Index tumbled into a correction on Monday as investors turn increasingly pessimistic about Big Tech and the artificial intelligence trade.
The tech-heavy index fell 1.4% to 27,989.82, putting it down more than 10% from an Oct. 6 peak to meet the technical threshold for a correction. While the index remains up 11% for 2026, this marks its third correction of the year as trading whipsaws with investors seemingly changing their minds on AI by the day.
The current selloff comes as Wall Street grows concerned about the cost of the AI buildout and when the hundreds of billions of dollars being spent will show clear signs of a payoff. Alphabet Inc.’s stock had its worst day ever last week after the company reported weaker-than-expected revenue for advertising and search. Meta Platforms Inc. and Amazon.com Inc. also slumped in the wake of their recent results.
“People are getting antsy about how much these companies are spending, spending, spending,” said Brian Culpepper, portfolio manager at James Investment Research. “I don’t think the AI trade is dead, but it did get ahead of itself. This has been a pretty darn strong market this year, but that has led to a lot of names getting overextended, especially since AI is a part of so many different stocks.”
Beyond the Magnificent Seven tech giants, this earnings season has featured several high-profile blowups, including chipmaker Intel Corp. to software firm ServiceNow Inc. Both suffered historic selloffs in the wake of disappointing forecasts.