Recent losses were exacerbated by China's retaliation against US tariffs, leading to the Nasdaq 100's biggest slump since 2022. The selloff has prompted investors to seek safer assets, questioning the profitability of Big Tech's heavy investments in AI. The index's price-to-earnings ratio has dropped from 38 to 30, still above the two-decade average of 25. Analysts suggest caution, as tech valuations remain high, and the market may continue to face downward pressure.
Key takeaways:
- The Nasdaq 100 has plunged into a bear market with losses exceeding 20% since February, driven by investor concerns over Trump's tariffs and their potential impact on the US economy.
- The tech-heavy index has seen nearly $6 trillion wiped out, with major companies like Apple and Nvidia experiencing significant market value losses.
- Despite the recent downturn, the Nasdaq 100 has still delivered annual gains of 20% over the past five years, though its price-to-earnings ratio remains above the historical average.
- Investors are cautious as tech valuations were previously high, and the cost of AI investments has not yet translated into expected profits, leading to uncertainty about future growth.