The Nasdaq-100 has fallen more than 10% from its October record as investors question the cost of the AI boom. For India, the selloff adds pressure on IT stocks but could push some global money towards Indian markets.
US technology stocks have had a difficult few weeks. On Monday, the Nasdaq-100 rallied more than 1% early in the session, then fell more than 750 points from its high to close down 1.39% at 27,989.82.
That close was 10.4% below the index’s record of 31,224.47 on 6 October, putting it formally in correction territory, defined as a fall of at least 10% from a record close. It was the Nasdaq-100’s lowest close since 29 July.
There was a partial recovery on Tuesday. Chip stocks rebounded ahead of AMD’s earnings. The Nasdaq Composite rose 0.83% to 25,372.01, and the S&P 500 rose 0.36% to 7,568.92, ending a three-day losing streak. The Nasdaq-100 gained 0.68% to 28,180.26, still in correction territory. The Dow fell 0.38%, or 197 points, to 51,786.72, as Apple dropped after a weaker profit margin forecast. Strong US job openings data pushed Treasury yields higher, adding pressure on growth stocks.
Spending, not earnings, is the concern
The selloff is not about weak earnings. Profits have been strong. Bloomberg Intelligence estimates third-quarter S&P 500 earnings growth at 31%, with 83% of the 341 companies that have reported so far beating estimates.
The issue is cost. Alphabet fell 12.6% last week, its worst day on record, after reporting capital spending of $51.4 billion in the quarter and negative free cash flow. Amazon’s capital spending reached $75.9 billion. Investors are asking when this spending will produce returns, and whether some of the largest companies are now spending more than they generate in cash. Palantir fell this week despite beating estimates and raising guidance, a sign that strong results alone are no longer enough to support high valuations.
The market underneath the index is broadening. On Monday, the equal-weight S&P 500, which gives every company the same weight, rose 0.73% even as the regular S&P 500 fell 0.51%. Seven of 11 sectors rose, led by consumer discretionary, materials, financials and consumer staples. Recent reports noted that the average US stock has outperformed the S&P 500 by the widest margin since 2009. Money appears to be moving out of the biggest technology companies into the rest of the market, rather than leaving US stocks altogether.
What it means for Indian investors
The US tech correction affects India in two ways.
The first is Indian IT. The Nifty IT index is already down 25–30% this year, as clients cut discretionary spending and AI threatens traditional outsourcing work. When US technology spending is questioned, Indian IT services companies are usually hit too. Infosys cut its revenue growth guidance to 1–2% last month, and further pressure on US tech budgets would make a recovery harder.
The second is foreign investment flows. Global funds that have been concentrated in US AI stocks may look for alternatives as those stocks correct. India has little direct AI exposure, and Indian valuations have fallen after this year’s decline. The recent signs of foreign investors returning to Indian stocks, after a record ₹3 lakh crore of selling this year, may partly reflect that shift.
AMD’s results and the US election outcome will shape the next few sessions. Earlier corrections in the Nasdaq-100 this year were followed by new records, and the index is still up about 11% in 2026. Whether this one follows the same pattern depends on whether the AI spending starts to show returns.
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