Nasdaq 100 Falls 3.5% in Worst Month Since March 2025 as AI Fears Meet Earnings Misses

The Quick Take

• The tech-heavy Nasdaq 100 Index fell 3.5%, notching its worst monthly performance since March 2025.
• AI spending concerns collided with earnings misses from major tech companies, creating a dual negative catalyst.
• The selloff reflects a sector-wide reassessment of whether accelerating AI capital expenditure will generate commensurate near-term revenue.

The Nasdaq 100's 3.5% decline — its worst monthly performance since March 2025 — marks a significant deterioration in sentiment for the technology sector that has led global equity markets through much of 2024-2026. The convergence of two negative forces is responsible: first, earnings misses from bellwether tech companies that had previously justified elevated multiples; second, investor anxiety about whether the extraordinary AI infrastructure spending announced by cloud hyperscalers will translate into measurable revenue gains within the medium-term investment horizon most institutions require.

The damage to Nasdaq correlates with pressure on Asian technology indices, as Singapore-listed tech funds and regional growth portfolios with US tech exposure face mark-to-market losses. Institutional rebalancing away from US tech growth stocks could redirect capital flows toward value sectors and emerging market equities, providing relative support for Asian markets with lower tech concentration. However, if the Nasdaq selloff reflects a genuine slowdown in AI monetization rather than a temporary valuation correction, the impact on Asian semiconductor supply chains — particularly Korean and Taiwanese chipmakers — will be more lasting.

The key forward signal is the Q4 earnings guidance season for US mega-cap tech, beginning in late January 2027. If companies including Microsoft, Alphabet, and Meta maintain or increase their AI capital expenditure guidance while simultaneously demonstrating revenue acceleration from AI products, sentiment could reverse quickly. Watch Federal Reserve commentary on financial conditions — the central bank monitors equity market volatility as part of its financial stability framework, and a sharp sustained Nasdaq decline could influence the pace and depth of any future rate adjustments, which remain the primary macro variable for growth stock valuations.

Synthesized from 1 source.