Nasdaq Correction Looms as AI Investment Downturn Gains Momentum
The Nasdaq 100 is flashing warning signals as it nears correction territory. A bearish double top formation has emerged below the 50-day moving average, driven by growing skepticism that the AI investment bonanza will actually pay off.
On July 7, the Nasdaq dropped 1.16% while the S&P 500 slipped 0.45%. The PHLX semiconductor index dropped 4.65% on the same day, despite positive earnings from Samsung.
The concentration problem in tech stocks is also a concern. Seven tech companies currently account for approximately 30% of the entire S&P 500's value, including Nvidia, AMD, Micron Technology, and Palantir. These companies have been under increasing pressure, with Palantir seeing an 8% drop in November 2025 even after reporting strong earnings.
The impact on crypto investors should not be underestimated. Bitcoin and the broader crypto market have shown increasing correlation with tech stocks, particularly during selloff events. Large funds that hold both tech equities and crypto positions face margin calls and risk limits when one side of the portfolio drops.