Nasdaq 100 Index Forecast: AI Spending Concerns Increase Pressure on Technology Stocks
Meta dropped after revising its capital spending outlook. The company now expects to spend $130-$145 billion in 2026 as compared to the previous range of $125-$145 billion. The increase in the lower end indicates that Meta remains committed to the heavy AI investment.
But Microsoft gained after its cloud revenue growth exceeded the Wall Street estimates. The result showed that AI spending can generate returns when it leads to stronger demand for cloud services.
Other AI-related companies also reported weaker results. SK Hynix recorded the sixfold increase in quarterly profit. But the figure was still below the market expectations. Its shares dropped 10%. Vertiv also fell by over 15% after the quarterly revenue missed estimates.
The competition from China also adds another challenge as Chinese companies develop advanced chips and offer cheaper AI models. This could put pressure on pricing power of US technology companies. But the Fed Chair said that the AI investment was creating the foundation for future growth. This means that AI remains the important long term driver but its short term impact will depend on how quickly companies turn their spending into earnings.
Stock Market Sell-Off Signals Further Nasdaq Volatility
The sell-off in the US stock market was not limited to the Nasdaq. The S&P 500 dropped to 7,316 and hit the lowest level in a month. The Dow Jones Industrial Average dropped to 51,594. The eight of the eleven S&P 500 sectors finished lower. The industrial sector contributed the most to the drop with a 3.24% loss, followed by a 2.5% drop in information technology. These overall declines suggest that investors were cutting back across the stock market rather than selling out the AI stocks.
But the earnings outlook is still supportive. The S&P 500 earnings increased by 37.9% in Q2 2026. But the growth rate dropped to 25.9%. The index is currently trading at about 20 times forecast earnings slightly above its 10-year average of 19.
