The Nasdaq 100 Index remains under pressure after forming a death cross pattern a few weeks ago. It has retreated to $18,257, down by over 17.8% from its highest point this year, meaning that it is in a deep correction and is about to enter a bear market. This report explores what to expect and the top levels to watch.
Why the Nasdaq 100 index has crashed
The Nasdaq 100 index has crashed as investors rotated from technology stocks to other sectors, as fears that the artificial intelligence (AI) bubble was bursting rose.
AI companies like OpenAI, xAI, and Perplexity AI have been some of the fastest-growing firms in the technology industry, attracting billions of dollars in funding. OpenAI recently raised $40 billion from Softbank.
The challenge, however, is that monetizing the industry has been a challenge. For example, customers balked at the pricing of Microsoft’s Co-Pilot product, and its launch has not contributed substantially to its revenue growth.
Therefore, there are signs that the AI bubble is bursting as some firms scale down their infrastructure spending. Also, the market is still watching the performance of DeepSeek, a Chinese firm that has changed how the industry works.
The Nasdaq 100 index has also plunged as the trade relations between the United States and China continue. China has now directed its airlines to avoid Boeing planes, and instead take deliveries from COMAC and Airbus.
The Trump administration also ordered companies like NVIDIA and Intel not to sell some of their least advanced chips to Chinese companies. In a statement, NVIDIA warned that the new directive would cost it over $5.5 billion.
Further, there are lingering concerns about whether the US economy will sink into a recession later this year as the trade conflict continues. Polymarket users have placed a recession risk at over 60%.
Tech stocks are usually the most affected ones when the recession starts because of their high valuation metrics.
Top Nasdaq index laggards and leaders
Most companies in the Nasdaq 100 index have crashed this year as these concerns have remained. The Trade Desk stock has plunged by almost 60% this year, making it the top laggard in the index. This decline happened as questions about its growth and its strong performance in 2024 rose.
Marvell Technology stock price has plunged by 53% this year, erasing billions of dollars of value. This decline is in line with what we predicted last year when we questioned about its valuation as it overtook Intel.
ON Semiconductor shares have fallen by 46%. Other top laggards in the Nasdaq 100 index are firms like Datadog, Lululemon, Microchip Technology, MongoDB, AppLovin, PayPal, and AMD.
On the other hand, the top laggards in the Nasdaq 100 index were firms like Exelon, Palantir, Vertex Pharmaceuticals, T-Mobile, and Take-Two Interactive.
Nasdaq 100 index analysis
Nasdaq 100 index chart | Source: TradingView
The daily chart shows that the Nasdaq 100 index has plunged in the past few months, moving from a high of $22,215 in January to the current $18,257.
It has recently formed a death cross as the 50-day and 200-day moving averages crossed each other. A death cross is one of the riskiest patterns in technical analysis.
The index has also moved slightly below the weak, stop & reverse point of the Murrey Math Lines tool. Therefore, the path of the least resistance is downwards, with the next point to watch being at $17,417, its lowest point in August 5.
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