Nasdaq-100 tumbles into its third correction this year as AI worries mount

The Nasdaq-100 has entered its third correction of the year, extending the "tech wreck" that began in October as concerns about artificial intelligence valuations weigh on the index. A correction refers to a decline of at least 10% from a recent peak, a threshold the index has now crossed multiple times in 2025—an unusually frequent pattern that underscores how sensitive technology shares have become to shifts in sentiment around AI.

The relevance extends beyond one index. The Nasdaq-100 is heavily concentrated in large technology and AI-linked companies, so its moves often shape broader market narratives. When AI enthusiasm cools, the effect can ripple through growth stocks, valuations, and risk appetite more generally. Investors are now watching whether the pullback deepens into a bear market—conventionally a 20% decline—or stabilizes as it has after prior corrections this year.

What to watch: whether selling pressure broadens beyond AI names, how upcoming earnings and guidance address AI spending and returns, and whether volatility remains contained or spreads across sectors. For now, the correction signals caution rather than a confirmed change in the market's longer-term direction.