US Stock Market: Crash In Nasdaq 100 Continues, Tech-Heavy Index Drops Almost 1200 Pts In 3 Days; Is AI Reason

US stock market witnessed a mixed trend overnight; however, the tech-heavy index extended its losses for the third consecutive day, falling sharply almost 1,200 points. Nasdaq is struggling, unlike the Dow Jones and S&P 500, due to selloffs in semiconductor chip stocks globally.

Nasdaq 100 Crash:

On June 24th, Nasdaq closed at 25,476.64, down by 110.40 points or 0.43%. During the trading session, the index plunged to hit an intraday low of 25,354.66, which resulted in an overall 1,164 points decline in the index for three days straight.

The last time Nasdaq stood in green was on June 18, where the index stood at 26,517.93.

Notably, the current drop is lower than the 2.21% and 1.32% crashes on June 23rd and June 22nd.

As per Mathieu Racheter, Head of Equity Strategy Research, Julius Baer, global equity markets suffered a sharp setback on Tuesday as investors reduced exposure to technology and semiconductor stocks. The Nasdaq has fallen around 3.3% at the time of writing, while the Philadelphia Semiconductor Index has declined almost 8%. South Korea1's technology-heavy Kospi Index fell 10% from recent highs. After driving a significant share of global equity returns during the first half of the year, artificial intelligence (AI)-related sectors became the epicentre of a broader risk reduction.

Semiconductor Stocks Recovered On Thursday!

In after-hours trading, Micron shares soared more than 15% after the memory-chip maker posted fiscal third-quarter results that exceeded expectations and forecast current-quarter revenue of $50 billion, sharply higher than $11.3 billion a year earlier and above analysts' estimate of $43.58 billion. Qualcomm also rallied 13% after lifting its fiscal 2029 non-handset revenue target to $40 billion from a previous forecast of $22 billion. Other semiconductor-related stocks moved higher as well, including Sandisk, Western Digital, Marvell Technology, Applied Materials, and Lam Research, as per Trading Economics.

This rally pushed Nasdaq 100 futures in foreign markets, higher by 2% on Thursday, while S&P 500 futures advanced 0.6%, while Dow futures added 0.1%.

But the semiconductor market continues to be volatile.

Is AI-Bubble Bursting?

According to Racheter, some investors have started to reassess the most optimistic assumptions surrounding AI-related demand growth following an exceptionally strong rally. In previous articles, we noted that positioning had also become increasingly concentrated, leaving technology stocks vulnerable to profit-taking and systematic deleveraging once sentiment started to turn.

That said, the expert added, "we do not view the sell-off as evidence that the AI investment cycle is ending. Similar to the correction earlier this month, the move appears driven primarily by positioning, valuation concerns, and changing interest-rate expectations, rather than a broad deterioration in corporate fundamentals."

Racheter pointed out that earnings growth remains robust and continues to be the key driver of this year's equity market gains. However, the latest market action provides an important reminder about concentration risk. The first half of 2026 was characterised by exceptionally narrow market leadership centred on a handful of US technology and AI related stocks.

"While we remain constructive on the long-term earnings outlook for the theme, periods of elevated volatility should be expected when investor positioning becomes crowded," said Racheter.

Improving earnings momentum across other regions, easing geopolitical risks, and lower energy prices are creating conditions for a broader participation in the global equity rally. In light of this, the recent correction highlights the benefits of looking beyond a single region or investment theme.

Lasltly, the expert said, "As market leadership broadens, a more diversified global equity exposure should help investors participate in the next phase of the bull market while reducing dependence on a small number of stocks and sectors."

Dow Jones & S&P 500:

Overnight, the Dow Jones Industrial Average was the only index on Wall Street that ended in green at 51,848.90, up by 182.06 points or 0.35%. However, the index corrected from its day's high of 52,248.69 on June 24, which was near to its record high of 52,281.19.

Furthermore, the S&P 500 index ended broadly volatile to 7,358.22, marginally down.

Looking ahead, investors will focus on the upcoming PCE price index report, which is the Federal Reserve's preferred measure of inflation.