Nasdaq Enters Correction as AI Infrastructure Concerns Spark Broad Tech Selloff

U.S. equities tumbled Thursday, erasing much of the previous session’s gains as investors rotated out of technology shares and into defensive sectors. The Nasdaq Composite plunged 4.2%, officially entering correction territory after declining more than 10% from its record high set last month. The S&P 500 fell 2.9%, while the Dow Jones Industrial Average dropped 2.2%, surrendering over half of Wednesday’s advance. Healthcare, consumer staples, and utilities outperformed amid the broader market turbulence.

The technology rout centered on mounting worries that financing hurdles and heightened political scrutiny could decelerate the massive buildout of artificial intelligence data centers. At a Wall Street Journal conference, Meta executive Dina Powell McCormick cautioned that constructing new data centers is “going to be harder.” While acknowledging that construction activity will likely slow, analysts emphasized that the long-term trajectory for AI infrastructure remains intact. The pressure rippled across the semiconductor complex and into cybersecurity names, including CrowdStrike and Palo Alto Networks. Even solid quarterly results from Advanced Micro Devices and Qualcomm failed to stem the selling.

The pullback has prompted portfolio managers to reassess AI exposure. Several positions — including Broadcom, Corning, and Arm — have been liquidated to reduce concentration risk, while holdings in Micron and Qualcomm are being maintained to preserve exposure to the sector’s long-term growth potential.

In corporate news, Cardinal Health surged 5% after reporting strong fiscal first-quarter results and raising its full-year guidance, driven by strength in its pharmaceutical and specialty distribution segments. While management’s strategy continues to draw confidence, the sharp rally prompted a decision to trim the position, adhering to the discipline that parabolic moves should be sold rather than chased. Kimberly-Clark also posted better-than-expected results and reaffirmed its outlook despite persistent sales pressure in China. Longer-term prospects remain favorable following the acquisition of Kenvue, though investors are awaiting further detail on anticipated synergies.

Other names discussed during the session’s rapid-fire segment included Cisco, Dutch Bros, Shake Shack, and Ralph Lauren.

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