Key Takeaways:

  • The Nasdaq 100 has dropped 10.2% from its February peak, officially entering a correction phase.

  • AI-related tech stocks are leading the decline, with Nvidia’s market cap shrinking by over 20%, accounting for 18% of the index’s drop.

  • Other major decliners include Tesla, Apple, Palantir, Meta, and Amazon.

  • Investors are re-evaluating valuations, questioning whether the tech rally fueled by AI hype can continue.

Tech Stocks Hit Hard as Market Sentiment Shifts

The sell-off in U.S. technology stocks accelerated on March 8, pushing the Nasdaq 100 down over 10% from its February 19 peak, officially marking a correction.

The tech-heavy index had soared over the past two years, driven largely by enthusiasm around artificial intelligence (AI), cloud computing, and big tech dominance. However, investor sentiment has shifted, leading to rapid de-risking in some of the market’s most overheated names.

AI Stocks Under Pressure: Nvidia Leads the Decline

  • Nvidia (NVDA) has lost over 20% of its market value since February 19, contributing to 18% of the Nasdaq 100’s overall drop.

  • Other major decliners include:

    • Tesla (TSLA) – Struggling with margin compression and demand concerns.

    • Apple (AAPL) – Facing weak iPhone demand in China and regulatory challenges.

    • Palantir (PLTR) – Hit by concerns over AI monetization and government contract reliance.

    • Meta (META) – Facing ad revenue slowdown and increased spending on AI infrastructure.

    • Amazon (AMZN) – Impacted by growth deceleration in AWS cloud services.

"The 'Seven Sisters' of U.S. tech have had an exceptional run, but their growth trajectory is now uncertain," said George Cipolloni, portfolio manager at Penn Mutual Asset Management.

While last quarter’s earnings were strong, he warns that future growth expectations may be unrealistic at elevated price-to-earnings (P/E) ratios.

Why Are Tech Stocks Selling Off?

Overextended AI Valuations

  • Many AI and big tech stocks traded at premium valuations, and investors are now questioning whether earnings growth can justify these prices.

Rising Interest Rates & Market Rotation

  • Higher bond yields are reducing the appeal of high-multiple tech stocks, prompting rotation into value sectors like energy and financials.

Profit-Taking After a Strong Rally

  • With Nvidia up nearly 250% over the past year, investors may be locking in profits, triggering selling pressure.

Weak Global Demand

  • Apple’s China struggles, slowing ad growth at Meta, and Tesla’s price wars are raising concerns about whether demand can keep up with tech expansion.