Experts Predict Nasdaq Stocks to Fall by 30% Under Current Conditions

Jeremy Siegel from WisdomTree warns: Nasdaq Composite could drop by 30% if AI spending fails to meet expectations. The statement was made on the 39th anniversary of Black Monday, as markets tested whether the AI growth momentum could be regained.

Concentration risk arises when an index depends on a small number of large companies or dominant ideas. The Nasdaq structure has a high proportion of tech companies linked to AI, so any trend change affects the entire index. Siegel has repeatedly pointed out the danger of excessive investments in AI, drawing parallels with previous business cycles: despite real demand, excess capacity eventually reduced the profitability of companies that invested the most in development.

Volatility last week arose for several reasons: the market was concerned about AI funding issues and the issuance of large debt securities by cloud infrastructure providers. Additional pressure was exerted by expensive oil, rising bond yields, and a spike in the volatility index.

On Friday, the Nasdaq Composite closed at 26,140 – a 2.15% drop for the day and the worst week since June; the index lost about 4.5% for the week. On Monday, the Nasdaq gained 1.8% by midday, jumping to 26,600 thanks to semiconductor and AI infrastructure stocks. During the day, the index corrected but remained positive, closing at 26,430.89 (+1.11%); the S&P 500 also rose, while the Dow Jones remained unchanged.

Siegel emphasizes that the reassessment of value is now focused on tech stocks with a high market share. If AI investments do not start delivering sustainable profit growth, the market faces a sharp correction – the decline could be about 30%. AI-related stocks occupy a record share of market capitalization, so disappointment could hit the entire growth stock sector: high concentration makes such a scenario more likely. Interest rates also play a role – large AI projects are often financed with borrowed funds, and expensive credit restrains development.