Nasdaq-100 tumbles into its third correction this year as AI worries mount

The Nasdaq-100 has entered its third correction of the year, extending the "tech wreck" that began in October as concerns about artificial intelligence valuations weigh on the index. A correction is typically defined as a decline of at least 10% from a recent peak, and this marks the third such pullback in 2025 — a reminder that even within a strong longer-term trend, sharp reversals can occur.

The market relevance here is concentrated in AI. The companies driving the index higher are the same ones most exposed to shifting sentiment on AI spending and returns, so weakness in that theme can move the broader index quickly. Whether this correction deepens into a bear market — commonly defined as a 20% decline — depends on whether earnings and forward guidance continue to support current valuations.

What to watch: the scale and duration of AI-related capital spending, upcoming earnings commentary from major index constituents, and whether selling pressure broadens beyond technology. Corrections are a normal part of market cycles, but three in one year signals heightened sensitivity to any disappointment.