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 1.9 per cent to close at 23,132.77, leaving the index down more than 11 per cent from a peak in October. It’s the first time since U.S. 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 per cent but short of a bear market plunge of 20 per cent.

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 per cent while Meta Platforms has fallen 30 per cent amid concerns about legal risks.

It isn’t just the lavish spenders, however, that are getting pummeled. Nvidia Corp., the biggest beneficiary of the largess, has dropped 19 per cent 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 45 per cent 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 per cent.

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.

Bloomberg.com

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