Nasdaq Plunges 2%: Overreaction or Bubble Bursting? Add or Trim Position?
$NASDAQ(.IXIC)$ fell sharply by 2% yesterday, with tech stocks taking the hardest hit and AI-related names facing a bloodbath.
$Alphabet(GOOG)$ , $Microsoft(MSFT)$ , and $Meta Platforms, Inc.(META)$ all dropped over 1%, while storage and semiconductor sectors saw almost across-the-board declines.
$Oracle(ORCL)$, after plunging 10% the previous day, fell another 4% as the market worries that its data center projects for OpenAI may be delayed until 2028. $Broadcom(AVGO)$ earnings beat expectations, but executive remarks on weak profit margins sent the stock down 11%.
With short-term profitability unclear, high-valuation tech stocks are seeing capital flight, directly dragging down the Nasdaq.
Market anxiety is further amplified by the Fed’s mixed signals and Trump’s AI executive order
The Chicago Fed president remains optimistic, while the Kansas Fed president opposes rate cuts, raising concerns that easing in 2026 may slow or even pause.
Adding to the uncertainty, Trump signed an AI executive order standardizing federal regulation and limiting state-level rules, which could increase compliance costs and slow innovation. Investor doubts over the AI sector are therefore intensifying.
Which side are you?
Optimists argue this is an “AI anxiety” overreaction, and the pullback in high-valuation stocks could be a buying opportunity.
Cautious investors fear a bubble burst, noting Oracle has already dropped over 40% from its highs, which could trigger a chain reaction. Short-term Treasury yields are falling, but long-term yields are rising, forming a “bear steepening” curve—a warning for investors to be wary of valuation risks.
Given this environment, what would you do? Add or trim your positions, or hold cash and wait?
Questions:
Do you think this Nasdaq decline is an “AI anxiety overreaction” or the start of a bubble bursting?
If you hold tech stocks, would you add, reduce, or stay on the sidelines?
Are you optimistic or cautious about the long-term potential of the AI sector?
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For my own tech exposure, I’m not adding aggressively and not panic-selling. I’m trimming selectively where valuations ran ahead of fundamentals, while holding core positions in companies with strong moats and balance sheets. I’m also keeping some cash on hand, as volatility could create better entry points.
Long term, I remain cautiously optimistic on AI. The trend is real and transformative, but returns will be uneven and volatile. Discipline on valuation and patience in execution matter more now than chasing hype.
@Tiger_comments @TigerStars
For those holding tech stocks, the temptation is strong to hit the sell button. But here is the paradox: the very sector sparking anxiety is also the one shaping our future. AI is not a passing fad. It is a tectonic shift. From healthcare breakthroughs to productivity revolutions, its long term potential is undeniable.
Yes valuations may wobble. Hype cycles can burn. But underneath the noise lies conviction. The companies building real AI infrastructure - chips, data centers, enterprise solutions are laying the rails for decades of growth.
As Warren Buffett said: Be fearful when others are greedy and be greedy when others are fearful. Today's fear is tomorrow's opportunity.
@Tiger_comments @Tiger_SG @TigerStars @TigerClub @CaptainTiger
Operations officially started today, Dec 12.
While the market is focusing on Powell's comments, the plumbing is getting fixed. The effects of liquidity ops usually lag by a few weeks.
2. $SPDR S&P 500 ETF Trust(SPY)$ put options for broad market declines
3. Ai sector is only a small part of nasdaq, inflation is the driver of interest rates
Check out my article on this from my profile page.
增加不確定性的是，特朗普簽署了一項人工智能行政命令，規範聯邦監管並限制州級規則，這可能會增加合規成本並減緩創新。投資者對AI板塊的疑慮也因此加劇。
$Alphabet(GOOG)$,$微軟(MSFT)$，和$元平臺公司(META)$跌幅均超過1%，存儲和半導體板塊幾乎全線下跌。
$Oracle(ORCL)$，繼前一天暴跌10%後，再跌4%，因市場擔心其爲OpenAI開展的數據中心項目可能推遲至2028年。$博通(AVGO)$盈利超出預期，但高管關於利潤率疲軟的言論導致該股下跌11%。