Nasdaq 100 slides into its third correction of 2026 as AI bets unwind
The Nasdaq 100 fell as much as 4.5% on Friday, completing a more than 10% slide from its most recent peak and putting the tech-heavy gauge into its third technical correction of 2026. Disappointing earnings from the companies at the centre of the artificial intelligence buildout drove the selloff, with Alphabet, Amazon.com, Intel and ServiceNow all reporting results that sparked steep declines.
The pattern has become familiar this year. The index's latest round trip follows a drop at the outbreak of the Iran war and a summer selloff in semiconductor stocks. The last time the market took three or more 10% swings in a single year was 2022, when Covid-era inflation and the Federal Reserve's rate-hiking cycle drove US stocks into a bear market.
"The entire sector is getting hit, so it's creating more havoc in the broad stock market," said Matt Maley, chief market strategist at Miller Tabak Co LLC, of the plunge that sent the gauge to the brink of a correction.
The reckoning is about returns, not just prices. "After years of operating under the assumption that all money lent to or invested in AI would yield phenomenal returns, sober questions are being asked about ROI, ROE, and in some cases, return of capital," said Steve Sosnick, chief strategist at Interactive Brokers LLC. Many tech companies have turned from "cash-flow-generating machines" into big borrowers, he added, feeding the swings that have become common in the sector.
For investors, the question is whether the AI trade can reassert itself after a third drawdown in a single year, or whether the borrowing and spending behind the buildout will keep the index on its volatile course.
