The AI-driven rally is losing momentum as semiconductor stocks retreat, valuation concerns intensify, and bearish technical patterns point to growing downside risks for the Nasdaq 100.
Key takeaways
- AI infrastructure and semiconductor stocks are under pressure as investors reassess elevated valuations and aggressive capital spending.
- The Nasdaq 100 has formed a bearish Double Top below its 50-day moving average, signalling rising risks of a potential correction.
- A break below 28,200 may trigger a deeper decline toward 26,990 and 26,288, while 29,630 remains key resistance.
The Nasdaq 100 has been the weakest among the major US benchmark stock indices since the start of July, where the tech-heavy index recorded a month-to-date decline of 4.1% as of 17 July 2026.
AI capex fatigue, multiple compression threats and “DeepSeek Moment 2”
Fig. 1: Month-to-date global stock indices performance with US PHLX Semiconductor as of 17 Jul 2026 (Source: MacroMicro). The information presented is historical information, and past performance is not indicative of future performance.
One of the primary drivers of the Nasdaq 100’s current lackluster performance has been the “elevator up, elevator down” effect from AI infrastructure-related and high memory bandwidth semiconductor stocks that recorded triple-digit returns in the first half of 2026.
Right now, these stocks are facing an “elevator down” effect due to the unwinding of a significant amount of leveraged long financial products tied to two major global bellwethers, high memory bandwidth semiconductor stocks, South Korea’s SK Hynix and Samsung Electronics, that plummeted by 15.5% and 10.5% for the week of 13 July 2026.
Secondly, the semiconductor landscape is signalling a vital transition in risk appetite from unanchored thematic speculation to strict cash-flow discipline. While near-term corporate earnings confirm that chip demand is blistering, elevated capital expenditure forecasts from suppliers like Taiwan Semiconductor Manufacturing Co. (TSMC) have sparked deep anxieties about industry-wide supply overbuilding.1
Thirdly, if tech hyperscalers continue to spend capital aggressively on back-end hardware infrastructure while delaying the commercial execution and monetisation of consumer-facing models (as vividly illustrated by recent AI product pipeline delays from major players like Google), high-beta growth multiples may be compressed.
Valuation metrics may increasingly demand realised revenue rather than forward capex visibility, putting the tech-heavy Nasdaq 100 at severe risk of mean reversion decline.
Fourthly, the occurrence of the “DeepSeek Moment 2,” where last week’s dual announcement of China-based Moonshot AI’s open-weight Kimi K3 model and Alibaba’s flagship Qwen3.8 Max preview model that can deliver frontier large language AI models at a lower cost and perform almost on par with costlier top closed-end models from OpenAI and Anthropic.
The rise of China’s AI businesses could force US leaders such as Anthropic to pull back on their investments. That could undercut demand at semiconductor powerhouses: Nvidia, SK Hynix, and Samsung Electronics. Hence, creating a potential negative feedback loop in the Nasdaq 100.
Therefore, since the start of July, AI infrastructure and high-memory-bandwidth semiconductor thematic benchmark stock indices have been the worst performers among major stock indices
South Korea’s KOSPI (significant weightage in SK Hynix and Samsung Electronics) was punished with a horrendous month-to-date decline of 17.9% as of 17 July 2026, and the US PHLX Semiconductor Sector Index recorded a double-digit loss of 12.6% over the same period, dragging down the Nasdaq 100 (see Fig. 1).
In contrast, China’s AI-centric Hang Seng TECH Index outperformed, gaining 8.1%.
Therefore, since the start of July, AI infrastructure and high-memory-bandwidth semiconductor thematic benchmark stock indices have been the worst performers among major stock indices.
Below 50-day moving average with “Double Top” configuration
Fig. 2: US Nasdaq 100 CFD medium-term trend as of 20 Jul 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The price action of the US Nasdaq 100 CFD (a proxy for the Nasdaq 100 E-mini futures) has traced out a 4-plus-week bearish reversal “Double Top” configuration since the current all-time high of 30,773 was printed on 3 June 2026 and has a weekly close below its 50-day moving average as of 17 July 2026.
In addition, the daily MACD trend indicator has staged a medium-term bearish breakdown from its key ascending trendline support, increasing the odds that the medium-term uptrend phase of the US Nasdaq 100 CFD that kickstarted from the 31 March 2026 low of 22,813 may have reached its terminal point, and it is now likely in transition to a potential medium-term (multi-week) downtrend phase.
Watch the 29,630 key medium-term pivotal resistance (also the intersection of the 20-day and 50-day moving averages). A break below the 28,200-neckline support of the “Double Top” may expose the next medium-term supports at 26,990 and 26,288 (also the key 200-day moving average).
However, a clearance and a daily close above 29,630 negate the bearish tone, paving the way for a retest of the “Double Top” range resistance at 30,715.
This article and its contents are intended for educational purposes only and should not be considered trading advice.
