Tech Stocks Just Took Their Worst Hit in Six Years — and the Market Still Moves With Them
The S&P 500's technology sector suffered its sharpest one-day drop in more than six years, yet it still makes up more than a third of the index.
A month of selling in technology and artificial intelligence stocks came to a head this week, when the S&P 500's information technology sector recorded its largest single-day decline in more than six years, according to InvestorsHub/ADVFN.
The trigger, the report says, was investor concern that Democratic gains in the US midterm elections could slow or shrink data centre investment — spending that has become one of the main drivers of demand for AI-related equipment and services.
A third of the index, even after the fall
Despite the selloff, technology's grip on the broader market has barely loosened. The sector still accounted for more than 35% of the S&P 500's market capitalisation at Thursday's close, according to the report — a weighting that remains above the level reached during the internet bubble of 2000.
That concentration means a relatively small group of large technology companies can move the whole benchmark. Robert Pavlik, a senior portfolio manager at Dakota Wealth Management, told the outlet that weakness in AI-linked stocks ripples through the entire sector, and the sector's weight means it drags the S&P 500 with it.
The exposure runs deeper than the sector label suggests. Alphabet, Amazon and Meta Platforms — three of the biggest spenders on data centre capacity — sit in other sectors of the index, yet their capital expenditure programmes are a major source of demand for AI infrastructure. Shifts in expectations for AI investment can therefore hit companies well beyond the technology sector's official boundaries.
Gains that leave room for more selling
The selloff looks less dramatic against the run that preceded it. Technology has advanced more than 200% since the US equity bull market began in October 2022, almost twice the S&P 500's gain over the same period, according to the report.
Several AI infrastructure names have kept much of their 2026 gains. Sandisk was approximately 250% higher for the year, Dell Technologies had risen around 160%, and Micron Technology had gained roughly 140%.
That cushion cuts both ways. Chuck Carlson, chief executive of Horizon Investment Services, told the outlet that investors in a profit-taking mood still have plenty of profits to take — a warning that more selling could follow as holders cash in on the rally.
As US equities recovered somewhat on Friday, the S&P 500 was approximately 8% higher for the year, while technology stocks had gained around 11%.
Valuations have flipped
The decline has also reshaped how technology is priced. Data from LSEG Datastream cited in the report showed the technology sector's forward price-to-earnings ratio had fallen to 17.1 by Thursday, down from more than 32 in October 2025. The broader S&P 500, meanwhile, traded at 17.9 times expected earnings — the first time since 2017 that technology's forward multiple has sat below the wider index.
Some strategists see that as a sign the bad news may already be in the price. Keith Lerner, chief investment officer at Truist Advisory Services, said in a note published Thursday that the market was arguably already pricing in a lot of bad news, adding that a little good news could now go a long way.
Whether that proves right will depend on two open questions: whether AI infrastructure spending continues at the pace investors expected, and whether corporate earnings support the forecasts behind those cheaper valuations. With technology still the largest component of the index — and AI exposure spread across it — the answers will shape the market well beyond tech itself.
Written by the BidAsk Newsroom. Based on reporting from the sources below.
