AI in action · Markets
The Nasdaq-100's Third Correction of 2026 Is an AI Story
The Nasdaq-100 closed 10.4% below its October 6 record on Monday, its third correction of 2026, as chip stocks fell 3.4% and broke their 200-day average. The rest of the market rose.
The Nasdaq-100 fell 1.39% to 27,989.82 on Monday, November 2, which left it 10.4% below its record close of 31,224.47 on October 6 and inside a correction, the market's name for a fall of 10% or more. BigGo Finance counted it as the index's third correction this year. It is still up about 11% in 2026. The Philadelphia Semiconductor Index lost 3.37% to 10,328.33, after a 7.20% drop on Friday, and closed below its 200-day moving average for the first time since June 2025.
The selling was concentrated. Marvell fell 12.72% after agreeing to buy Lumentum in a $115 billion all-stock deal, Oracle 8.85% after filing to raise $20 billion in stock and bonds, Intel 8.80% as last week's weak guidance kept weighing, AMD 7.52% a day before its own results, Micron 5.85% and Applied Materials 3.99%. Microsoft lost 2.83%. Amazon, by contrast, rose 2.20%, and the Dow gained 0.41% on industrial and financial stocks, while the S&P 500 fell only 0.51%. The VIX rose 9.58% to 21.28.
Fund managers described the same worry in different words. "People are getting anxious about how much money these companies are spending, spending and spending again," Brian Culpepper of James Investment Research said, adding that he does not think the AI investment craze is over: "It has just gotten a bit ahead of itself." Jake Dollarhide of Longbow Asset Management said investors need to recognise that there is a limit to how much the big spenders can invest and what it means for shareholder value. Even good macro news did not help: October's ISM manufacturing index rose to 55.5, above the 54.5 expected.
Not everyone read it as a warning. Deutsche Bank's Parag Thatte, who had cut technology to underweight on October 9, moved it back to overweight on Monday: "The risk-reward now favors going overweight again," he wrote, according to CNBC, noting that the Nasdaq-100 had fallen about 8% since his downgrade and that past rotations out of tech had been followed by strong gains. That is the classic contrarian argument, and it rests on positioning rather than on any change in the spending numbers.
The next tests are close. AMD reports after Tuesday's close, the midterm elections are being held the same day, and Friday brings October's jobs report. For anyone studying the AI trade, Monday's split is the useful data point: the market is no longer pricing AI as a single bet, it is separating companies that spend from companies that are paid, and both from everything else.
Sources: CNBC — Nasdaq starts November with 1% loss as tech melts down again (Nov 2, 2026); BigGo Finance — Doubts Over AI Investment Returns Spread, Nasdaq 100 Enters Third Correction of the Year