The selloff in U.S. technology stocks gathered pace on Tuesday, taking the sector's market value loss to about $1.6 trillion over five trading sessions as investors continued to question heavy artificial intelligence spending, disappointing earnings and rising capital expenditure commitments by the industry's largest companies.
The latest wave of selling pushed the Nasdaq-100 into correction territory during the session, marking a decline of more than 10% from its most recent record high. The index, which tracks the 100 largest non-financial companies listed on the Nasdaq exchange, finished the day 1% lower.
Tesla remained among the biggest laggards after losing more than 16% over the past five trading sessions. Chipmakers also bore the brunt of the selloff as concerns over AI-related spending spread across the semiconductor sector.
Shares of Sandisk fell 14%, while AMD, Arm Holdings, Micron Technology and Seagate Technology each dropped more than 8%. Dell Technologies, a major supplier of AI data centre servers, declined 8.1%, while Intel lost 5.8%.
Over the past five sessions, Sandisk, T-Mobile, Meta Platforms, Alphabet and Amazon have declined between 7% and 10%.
The weakness in technology shares also knocked Nvidia from the top spot among the world's most valuable listed companies, allowing Apple to reclaim the position for the first time since April 2025. Investors are now turning their attention to earnings from large technology companies, particularly spending plans from Meta Platforms and Amazon.
Apple Regains Lead
Nvidia came under pressure as investors reassessed the costs associated with expanding AI infrastructure. The decline in its shares allowed Apple to close the session with a larger market capitalisation.
Nvidia had held the title of the world's most valuable listed company since June 2025 after overtaking Microsoft. The chipmaker also briefly surpassed a $5 trillion market value in October.
Despite the recent weakness, Nvidia shares are still up 4% this year, while Apple has gained 24%.
Investors have favoured Apple's strategy of limiting direct spending on AI infrastructure by leasing computing capacity instead of investing heavily in its own facilities.
While Nvidia continues to benefit from demand for AI processors, investor interest has broadened to include memory chips and other data centre components. Companies such as Micron Technology, SK Hynix and Sandisk have also gained from increased AI infrastructure spending.
Earnings In Focus
Selling accelerated after quarterly results from Alphabet and Tesla failed to reassure investors.
Alphabet fell 7% after raising its full-year capital expenditure forecast to more than $200 billion. Tesla dropped nearly 15% after reporting profit below expectations and signalling that operating expenses would continue to rise.
The recent decline reflects investor concerns over rising AI investment costs, weaker earnings and increasing capital expenditure across the technology sector.
Markets are also preparing for a key week of earnings from major technology companies. Investors are expected to closely watch capital spending plans from Meta Platforms and Amazon, which could influence the next move in technology stocks.
Bloomberg estimates show Alphabet, Microsoft, Amazon and Meta are expected to spend about $724 billion on capital expenditure this year and nearly $950 billion in 2027.
Apple, despite outperforming many of its peers, also faces challenges. Higher demand for memory chips used in AI computing has increased costs, prompting the company to raise prices for products including MacBooks and iPads. Investors are assessing whether those price increases could weigh on demand and profitability.
The rapid expansion of AI infrastructure is also reshaping business models across the sector. Alphabet reported negative cash flow in the second quarter despite generating substantial revenue, underscoring investor concerns about the financial impact of elevated AI spending, according to Bloomberg.
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