Nasdaq Dips Amid Tech Selloff, Escalating AI Disruption Concerns

NEW YORK (Azat TV) – The tech-heavy Nasdaq Composite index experienced a significant decline on Tuesday, sinking nearly 2% as investors reacted to a flood of tech-focused earnings reports and growing concerns over the disruptive potential of artificial intelligence. The broad market downturn saw the S&P 500 lose 1.3% and the Dow Jones Industrial Average fall approximately 0.9%, or around 400 points, reversing Monday’s gains for the blue-chip benchmark.

Nasdaq’s Plunge Amid Tech Sector Woes

The sell-off intensified throughout Tuesday, placing the tech sector under considerable pressure. While some early optimism emerged from Palantir’s surprisingly strong quarterly results, signaling potential room for growth in the AI trade, this sentiment quickly flipped. Many of the biggest names in technology continued a recent slide, reflecting a broader “dour mood” surrounding the sector, as reported by Yahoo Finance. This downturn comes amid fears of “Big Tech overspending” and the potential for an “AI bubble,” according to market analysts.

AI Disruption Fears Fuel Software Sell-off

A major driver of Tuesday’s market anxiety was the escalating concern over AI’s impact on traditional software-as-a-service (SaaS) businesses. Bloomberg highlighted a “SaaSpocalypse,” with sentiment on Wall Street shifting from bearish to “doomsday” as traders dumped shares across the industry. This fear was underscored by AI startup Anthropic’s unveiling of a new productivity tool specifically designed for in-house lawyers, which sent shares of legal software and publishing firms tumbling. Companies like SAP, Salesforce, and ServiceNow experienced deep sell-offs, and firms such as London Stock Exchange Group Plc and Thomson Reuters Corp. also saw significant declines. The S&P North American software index recorded a 15% drop in January, marking its biggest monthly decline since October 2008, as AI disruption fears, supercharged by tools like Anthropic’s Claude Cowork and Alphabet’s Project Genie for immersive world creation, continued to mount.

Key Earnings Reports and AI Investment Scrutiny

The day’s trading also saw specific tech giants facing headwinds. Nvidia, a key player in AI chip manufacturing, fell over 3% amid reports of cooling relations with OpenAI. The startup’s dissatisfaction with Nvidia’s latest AI chips has reportedly stalled talks for a potential $100 billion investment, a plan that Nvidia CEO Jensen Huang had already downplayed on Monday. Amazon and Microsoft also saw their shares decline as the software sector continued its sell-off. Market attention now shifts to upcoming earnings reports, which are expected to provide further clarity on the health of the AI trade. Chipmaker AMD’s after-hours earnings report on Tuesday is seen as a crucial indicator, setting the stage for quarterly updates from Amazon and Alphabet later in the week, as noted by Yahoo Finance. These reports will be closely scrutinized for insights into AI spending and its perceived impact on profitability.

PayPal’s Steep Decline Amid Sector Exodus

Beyond the direct AI impact, other significant earnings news contributed to the market’s struggles. Payments services firm PayPal saw its stock tumble over 16% after reporting quarterly results and a 2026 forecast that missed analyst estimates, as reported by Reuters. The company cited weaker US retail spending and slow growth in its branded checkout segment. The announcement also included the appointment of HP boss Enrique Lores as its new CEO, effective March 1. While some analysts, like Great Hill Capital chair Thomas Hayes, viewed PayPal’s plunge as a “massive buy signal” for long-term investors, the immediate reaction reflected a broader “exodus from software stocks” and a “visceral reaction from spooked retail investors,” according to Yahoo Finance.

The day’s market movements unfolded against the backdrop of a partial US government shutdown nearing its end, which, while not directly causing the tech sell-off, contributed to a general sense of economic uncertainty. However, the dominant narrative remained the re-evaluation of tech valuations in an environment increasingly shaped by AI’s transformative, and at times, unsettling, potential.

The pronounced sell-off in the Nasdaq, particularly within the software sector, signals a significant re-pricing of technology stocks driven by a growing investor conviction that artificial intelligence represents not just an opportunity for growth but also a profound threat of disruption and obsolescence for established business models.