Nasdaq 100 enters correction as investors grow pessimistic about AI
The tech-heavy index fell 1.4 per cent on Monday, marking its third correction this year as concerns rise over artificial intelligence spending.
The Nasdaq 100 Index entered a correction on Monday after falling 1.4 per cent to 27,989.82, according to Mint.
The index has dropped more than 10 per cent from its peak on October 6, meeting the technical threshold for a correction. Despite this, the index remains up 11 per cent for 2026.
Wall Street investors are reportedly concerned about the high costs of artificial intelligence (AI) infrastructure and the timeline for seeing returns on the hundreds of billions of dollars being invested.
Recent earnings reports have contributed to the decline. Alphabet Inc. saw its worst day of trading last week following weaker advertising and search revenue, while Meta Platforms Inc. and Amazon.com Inc. also experienced slumps.
Brian Culpepper, a portfolio manager at James Investment Research, said investors are uneasy regarding the high level of spending by these companies. He noted that while the AI trade is not dead, it may have become overextended.
Other companies, including chipmaker Intel Corp. and software firm ServiceNow Inc., also faced significant selloffs following disappointing forecasts.