Nasdaq: Big Tech Earnings Are Here, and Nasdaq Is on the Verge of a Correction

Big Tech’s rapid rotation has sent the Nasdaq 100 down 8% in just two weeks, putting it on the cusp of a correction. Whether it can avoid that dubious milestone will likely hinge on the earnings of a quartet of companies worth nearly $10 trillion combined.

In a week that also includes the Federal Reserve’s interest rate decision, investors will focus primarily on Microsoft’s results on Tuesday, and over the next two days on the results of Meta Platforms, Apple and Amazon.

The stakes were already high after Big Tech’s wild first-half rally left the largest companies with big stock gains and stretched valuations. They became downright critical after Alphabet’s results last week raised concerns that its AI spending had become too high relative to near-term gains. “Those gains are really important,” said Michael O’Rourke, chief market strategist at Jonestrading. “If you can’t beat expectations, I think the interpretation is that AI isn’t delivering what people were expecting.”

The results will come as a market reels from one of the fastest, sharpest rotations in years. Investors finally became wary of AI-leading companies after months of ignoring warnings that their run was overdone. They sold $2.6 trillion of the Nasdaq 100 and invested in stocks that had long been laggards, including small companies and financial and industrial companies.