Nasdaq Falls 5.5% as Tech Shares Lead Broad Market Sell-Off

A steep retreat in technology shares pushed the Nasdaq Composite into correction territory Thursday, while losses spread across every S&P 500 sector. The session showed how quickly enthusiasm for AI-linked companies can give way to concern about high valuations, growth expectations and the costs of building data centers.

The Nasdaq fell 5.5% to 24,315, its biggest one-day percentage loss since the April 2025 tariff tantrum. That left it more than 10% below its October 6 high of 27,599.79, the threshold commonly used to describe a market correction. The Dow Jones Industrial Average lost 3.4% to close at 51,523, and the S&P 500 dropped 4.4% to 7,353. The Cboe Volatility Index, often called the market’s “fear gauge,” climbed to its highest level since March.

Technology shares bore the brunt of the selling. Micron Technology (MU) slid 17.5%, while Sandisk (SNDK) fell 22.3%. Both had risen sharply earlier in the year as investors bet on demand tied to artificial intelligence: Micron had tripled, and Sandisk had quadrupled.

Nvidia (NVDA), a closely watched company in the AI industry, lost 9.3%. It was the chipmaker’s worst session since January 27, 2025, when its shares fell 17% during the DeepSeek crash. Other large technology firms also declined: Alphabet (GOOGL) fell 2.2%, Meta Platforms (META) lost 4.0%, and Microsoft (MSFT) dropped 3.6%. Each has announced substantial spending on AI projects.

Valuations and data center plans come into focus

Investors were weighing worries about potential obstacles to data center construction, alongside questions about whether tech share prices had moved too far ahead of company results. David Bahnsen, chief investment officer at The Bahnsen Group, described the sell-off as a tech-led correction driven by valuations he considers disconnected from underlying business performance. His view is that enthusiasm and hype had become a bigger force behind share prices than company fundamentals.

That assessment is one perspective on a volatile session, rather than a settled explanation for every stock’s decline. When many investors have crowded into a popular theme, expectations can become demanding: companies need to deliver strong growth to justify elevated prices, and even a change in confidence can trigger broad selling. A sharp fall also does not, by itself, establish whether a company’s long-term prospects have changed.

Bahnsen said he does not view the day’s drop as a buying opportunity, citing technology-sector valuations. He pointed instead to consumer staples and energy as areas he considers more defensive, noting that companies in those sectors can have steadier cash flows and a history of dividend growth. Those characteristics may appeal to investors seeking less exposure to fast-moving technology shares, though they do not remove the possibility of losses or make any sector suitable for everyone.

For households reviewing a portfolio after a sudden market move, the practical question is whether its mix still fits their time horizon and tolerance for declines. A single session can be unsettling, but reacting to one day’s prices may lead to decisions that do not match a longer-term plan. The day’s figures also underline the value of understanding how much a portfolio depends on a small group of high-profile companies or on one investment theme.

Qualcomm falls after its forecast misses estimates

Qualcomm (QCOM) dropped 9.5% as a weak forward outlook added company-specific pressure to the broad sell-off. The chipmaker reported fiscal fourth-quarter earnings of $2.17 per share on revenue of $10.4 billion, beating Wall Street expectations on both measures.

The next-quarter forecast was less encouraging for analysts. Qualcomm projected fiscal 2027 first-quarter earnings of $2.25 per share at the midpoint, just below the $2.27-per-share estimate. A company can report results above expectations and still see its shares fall when investors focus on what management expects next.

Oppenheimer analyst Rick Schafer acknowledged Qualcomm’s leading position in modem and single-chip integrated chipset products, while raising concerns about its reliance on mobile phones. He cited limited growth in that market and intensifying competition. Qualcomm is working to diversify, including through expansion into data centers, but Schafer said he would take a wait-and-see approach while those efforts develop. He maintained a Perform (Hold) rating.

AppLovin rises as strong results stand out

AppLovin (APP) moved sharply in the opposite direction, gaining 31% for its best day in two years. The company operates an AI-powered mobile advertising platform, and investors welcomed its third-quarter results.

AppLovin earned $4.30 per share, up 76% from a year earlier, while revenue grew 55% to $2.18 billion. Both results exceeded analysts’ estimates. The performance illustrates why a broad sell-off does not affect every company in the same way: investors may continue to reward businesses whose reported growth clears high expectations.

Wedbush analyst Alicia Reese said AppLovin had passed a test she had set for the quarter. She reiterated an Outperform (Buy) rating and raised her price target to $600 from $560, a figure she described as nearly 70% above the share price at the time. Reese also pointed to the seasonal peak in fourth-quarter advertising and said e-commerce could boost results. Those views are an analyst’s assessment, and the expected seasonal lift is not a guarantee.

The split between AppLovin’s rally and the steep declines in chipmakers offers a useful reminder: companies grouped under the AI label can face very different business drivers and investor expectations. After a volatile day, the figures to watch are whether future results support the prices investors are willing to pay, and whether announced spending produces growth that companies can sustain.

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