The Nasdaq 100 index has fallen more than 10% from its recent peak, entering correction territory on July 28. The catalyst behind this sharp decline is a heavy selloff in semiconductor and memory stocks that is shaking investor confidence across tech and crypto markets.

Shares of major chip makers cratered during the latest US trading session. Dell dropped 13%, Intel lost 7%, and several memory manufacturers tumbled roughly 10%. Across the Pacific, Asian markets felt the pain even more acutely. Samsung and SK Hynix each plunged over 15%. These declines followed reports of a Chinese state-backed firm starting mass production of chipmaking equipment, a move that threatens to disrupt the global semiconductor supply chain.

Unpacking the AI Spending Impact

The fear stems from uncertainty over AI-related investments. JPMorgan estimates hyperscalers like Microsoft, Google, and Amazon will pour nearly $870 billion into AI infrastructure by the end of 2026, marking a 77% increase from last year. Yet, doubts have surfaced about whether this surge in AI demand will sustain chipmakers’ growth given current market headwinds.

Earlier in 2026, the Nasdaq already experienced a correction in March that wiped out about $17 trillion in global market value during a broad selloff. SpaceX joined the Nasdaq 100 on July 7 after its IPO, but its shares had already corrected significantly even before being added to the index.

For crypto investors, this warning sign is critical. During the March downturn, crypto stocks endured steep selling pressure as risk appetite vanished. Watching if the Nasdaq stabilizes at these levels or slides further toward a 20% bear market loss will be key. The market will closely analyze hyperscalers’ upcoming earnings to see if the massive AI spending on cloud computing infrastructure justifies current valuations.

If Microsoft, Google, and Amazon show AI revenue scaling quickly, this dip might soon turn into a compelling buying opportunity.

This article is for informational purposes only and does not constitute financial advice.