Nasdaq slides as tech selloff deepens on AI disruption fears
The Nasdaq fell sharply Wednesday as investors rotated out of technology shares, extending a pullback that has been building for most of the past week. The move was driven by a fresh wave of selling in chipmakers and software names, with traders weighing whether rapid advances in AI could pressure long-established business models across the sector.
By the close on February 4, 2026 (ET), the Nasdaq Composite was down more than 1% after a session that saw big intraday swings and a widening gap between tech and many non-tech parts of the market.
Where the Nasdaq finished
The Nasdaq Composite ended the day at 23,255.19, down 336.92 points (-1.43%) from the prior close of 23,592.11 (ET). The decline came even as the broader market showed a more mixed picture, with strength in some defensive and value-oriented pockets offsetting the drag from mega-cap and high-multiple tech.
A quick snapshot of the day:
| Metric | Level | Move |
|---|---|---|
| Nasdaq Composite close (Feb. 4, 2026 ET) | 23,255.19 | -336.92 (-1.43%) |
| Prior close | 23,592.11 | — |
| Nasdaq Inc. shares (1:47 p.m. ET) | $87.06 | -0.7% |
What drove the drop
The most immediate catalyst was a steep decline in a major chipmaker after its forecast failed to match elevated expectations. That slide rippled through semiconductors and adjacent AI-infrastructure plays, turning what had been a leadership group into a pressure point for the entire index.
At the same time, a broader narrative reasserted itself: if AI tools continue improving at the current pace, investors are increasingly asking whether parts of the software and cloud ecosystem face margin pressure, slower renewals, or more competitive disruption than the market had priced in. Even without a single headline “shock,” the Nasdaq’s heavy weighting in tech means these themes can translate into outsized index moves.
The AI debate: growth engine or margin threat?
For the past two years, “AI” has functioned as the market’s most powerful growth story—supporting premium valuations for chips, data-center equipment, and select platforms. This week’s selling suggests the conversation is shifting from pure optimism to second-order effects:
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For hardware and infrastructure, the question is whether demand remains smooth or becomes lumpy as customers optimize spending.
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For software, the question is whether AI features become a competitive moat—or whether they erode pricing power by making tools easier to replicate.
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For mega-cap platforms, the question is whether AI-driven costs rise faster than revenue, at least near term.
None of those questions is new, but they tend to matter more when valuations are already stretched and investors are looking for reasons to take profit.
What to watch next: earnings and rates
The near-term path for the Nasdaq still runs through two familiar checkpoints: big-company earnings and interest rates.
Earnings: With several large tech names still reporting, guidance language on AI spending, hiring, and customer demand will be watched as closely as the numbers. When the Nasdaq is moving on narrative, even small shifts in tone can move clusters of stocks in the same direction.
Rates: Tech valuations are sensitive to yields because more of their value is tied to expected future cash flows. If bond yields drift higher—or if the market pares back expectations for rate cuts—the Nasdaq can feel it quickly. Conversely, any data that supports steadier inflation and softer growth can ease the pressure, even if it doesn’t immediately spark a rally.
What the move means for investors
Wednesday’s action reinforced a simple point: the Nasdaq remains the market’s most sentiment-driven major index. When leadership is concentrated in a handful of tech themes, selling can cascade—especially if investors are simultaneously reassessing what “AI winners” actually look like beyond the next quarter or two.
The next few sessions will likely hinge on whether dip-buying reappears in semiconductors and high-growth software, or whether the rotation broadens into a more durable “out of tech, into everything else” trade. If the Nasdaq keeps making lower highs while non-tech sectors hold up, that would signal a choppier, more selective tape through the rest of February.
Sources consulted: Reuters; Associated Press; Financial Times; Federal Reserve Bank of St. Louis (FRED)
