Tech Stocks Rout as AI Trade Confidence Falters
The Nasdaq 100 plunged more than 6 per cent on Thursday before recovering nearly 2 per cent on Friday as investors reassessed risk.
Updated on Nov. 6, 2026 in Stock Markets
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Technology stocks suffered a sharp rout as confidence in the AI trade faltered, with the Nasdaq 100 falling more than 6 per cent on Thursday. The index rebounded nearly 2 per cent on Friday.
Why it matters
The sell-off reflects a broader pullback from riskier assets, with investors buying protection against debt defaults and cash funds drawing a $140 billion inflow in the week to Wednesday. The moves signal growing caution about the financing behind the AI boom.
The VIX index climbed above 28 on Thursday, its highest level since late March, and has risen more than 40 per cent over the week. Five-year credit default swap spreads on CoreWeave debt surged past 1,000 basis points to record highs, though the source does not indicate how long those levels will persist.
The players
Nasdaq 100
A stock market index tracking the largest non-financial companies listed on the Nasdaq exchange, heavily weighted toward technology firms.
CoreWeave
A cloud computing company that provides GPU-based infrastructure for artificial intelligence workloads.
The details
Investors bought insurance against a debt default on CoreWeave debt, pushing spreads to distressed levels, while spreads on SpaceX and Intel also jumped this week. The premium on US high yield corporate credit has risen to its highest since the Liberation Day ructions, even as US 10-year Treasury yields have fallen 50 basis points from peaks above 5 per cent hit last month.
Timeline
Last month: US 10-year Treasury yields peaked above 5 per cent before falling 50 basis points.
Thursday, November 5, 2026: Nasdaq 100 plunged more than 6 per cent.
Friday, November 6, 2026: Nasdaq 100 rose nearly 2 per cent.
Market Dynamics
The premium on US high yield corporate credit has climbed to its highest level since the April 2025 Liberation Day ructions, even as Treasury yields retreat from the above-5 per cent peaks of last month. Cash funds drew a $140 billion inflow in the week to Wednesday, suggesting investors are shifting toward safety while credit spreads widen.
Investors holding tech-heavy index funds or high-yield bond exposure saw sharp swings this week, and the widening spreads on corporate debt raise the cost of borrowing for riskier issuers. Those managing personal portfolios may want to review their exposure to AI-linked equities and credit.
The takeaway
Sharp single-day swings in the Nasdaq 100 and widening credit spreads suggest that confidence in the AI trade is being tested by financing concerns. Investors should watch whether credit markets stabilize alongside equities.
Further reading
For broader context on how these moves fit into market activity, see Stock Markets.
Source note: This article includes information reported by CNA.
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