The Nasdaq 100 index has fallen over 9% from this month's historic high of 20,675 points.
Technology stocks are experiencing selling pressure.
According to the Finance APP, the Nasdaq 100 index is a technology stock index composed of about 100 of the largest non-financial companies in the Nasdaq Composite Index. It has fallen more than 9% from this month's historic high of 20,675 points, down to 18,757 points. This is driven not by fundamental issues, but rather by investors shifting from long-term performing technology stocks to lower-valued areas in the market.
Part of the reason for the stock price decline is that shareholders are concerned about whether the billions of dollars invested in artificial intelligence by technology companies in the next few years will achieve a return on investment. Analysts predict that companies in the Nasdaq 100 index, such as Meta (META.US) and Microsoft (MSFT.US), will increase capital expenditures. Previously, Alphabet (GOOG.US, GOOGL.US) stated in its earnings call that the risk of underinvestment is greater than the risk of overinvestment. However, analysts still expect that companies in the Nasdaq 100 index will achieve higher net asset returns than companies in the S&P 500 index in the next few years.
These companies will continue to increase profits, maintain sufficient cash reserves, and maintain their competitive advantages in the future, which is beyond doubt. However, investors are willing to pay a limited price for these strong returns, which has also raised concerns about return on investment.
Goldman Sachs Executive Director Bobby Molavi pointed out that part of the reason for the sell-off of technology stocks is because the market positioning is too concentrated. This also means that at a certain price, portfolio managers will start buying these stocks with growth potential again.
The Nasdaq 100 index is trending towards stability at a key level. According to FactSet data, as of Tuesday afternoon in the Eastern US, the index stabilized around 18,750 points, slightly above its 100-day moving average of 18,709 points. Normally, when there is a major change in the investment environment, such as a spike in interest rates in 2022, the index would drop below this level. However, since then, this level has been a 'support' for most of the past 12 months. More importantly, the current situation is not as serious as it was in 2022, so it would not be surprising if buyers continue to enter the market at this level.
As of Tuesday's close, Nvidia (NVDA.US) was down more than 7%, META was down 0.54%, Alphabet was up slightly; Microsoft was down 0.9%, and after the latest earnings report was released, it plummeted more than 6% after hours.