Tech Selloff Intensifies as Nasdaq Plunges
Tech selloff pushed a rotation from AI into real-economy stocks, pressuring the Nasdaq and widening losses while mixed earnings raised trading uncertainty.
KEY TAKEAWAYS
- Two-day Nasdaq decline through Feb. 4–5, 2026 erased nearly $1 trillion in tech market value.
- Investors rotated from AI leaders into real-economy stocks, widening selling pressure across chips and software.
- Software names stabilized amid earnings as Palantir and Teradyne posted stronger-than-expected guidance.
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Tech stocks sold off sharply on February 4–5, 2026, as investors rotated out of AI leaders into real-economy sectors. The Nasdaq Composite and Nasdaq 100 fell more than 1% on each of those two trading days, erasing nearly $1 trillion in technology market value. Software stocks showed signs of stabilization amid mixed earnings and guidance.
Nasdaq Declines and Market Rotation
The Nasdaq Composite and Nasdaq 100 posted back-to-back losses exceeding 1% for the first time since April 2025. On February 4, the S&P 500 slipped 0.8% and the Nasdaq 100 declined 1.55%. The two-day Nasdaq retreat wiped out close to $1 trillion in tech market capitalization.
Ahead of the February 5 open, Nasdaq futures dropped 1.1% and S&P futures fell 0.7%, pressured by concerns over Alphabet’s spending plans and weak forecasts. U.S. markets opened lower, with the Nasdaq Composite down about 0.6%. Chip and AI-infrastructure stocks led the pullback, with Nvidia down 9%, Broadcom off 7%, and AMD down 15% week to date.
AI Tool Release Triggers Software Selloff and Mixed Guidance
The release of an AI automation tool for lawyers by Anthropic coincided with sharp declines in software and data-services stocks. Thomson Reuters fell more than 15%, EPAM Systems dropped over 13%, Intuit and FactSet each declined more than 10%, ServiceNow and Adobe lost over 7%, and Salesforce eased more than 6%.
Despite the selloff, some companies reported strong guidance. Palantir forecast 2026 revenue between $7.18 billion and $7.20 billion, well above the consensus near $6.27 billion. Teradyne projected first-quarter revenue of $1.15 billion to $1.25 billion, exceeding the consensus near $930 million. Both stocks rose between 5% and 11% after their forecasts.
Software stocks showed signs of stabilization on February 5 amid ongoing earnings reports. Analysts remain divided: some warn that AI could pressure licensing revenue and legacy applications, while others consider those concerns overblown and highlight resilient fundamentals.
