Oil prices break above $100, and AI cools off; Nasdaq 100 has wiped out more than 5% in two weeks

NASDAQ 100 falls for two straight weeks: the AI narrative is being questioned on valuation for the first time

Summary first: Nasdaq 100 ended the week down 2.13%, and together with last week’s decline, this is the first time since March that it has posted back-to-back weekly losses. This is not a routine technical pullback; rather, the market is repricing the question of whether “AI capital expenditures can deliver returns,” compounded by Middle East geopolitical tensions pushing oil prices higher, creating a double squeeze.

Background

In June, Nasdaq 100 briefly tested a record high of 30,773 points. After that, it entered an “elevator-style” slide, retreating more than 4% from the peak by July 20. In the week of July 17, Nasdaq fell 2.9%, marking the largest single-week drop in the recent period. This week (as of July 24), both the S&P and Nasdaq have fallen for two consecutive weeks, while the Dow has even drifted lower for a third straight week. Market sentiment has shifted from “chasing AI” to “reassessing valuations and cash-flow quality.”

Data and Logic

On July 23, Nasdaq 100 fell 1.87% in a single day, marking the largest one-week decline since June. On July 24, the Nasdaq Composite fell 0.64% to 24,975.82 points. The Philadelphia Semiconductor Index dropped 4.25% that day, and at one point during the week it was down more than 3%.

One trigger: Alphabet raised 2026 capital expenditures to a record high of $205 billion, renewing market doubts about the sustainability of AI spending at mega-scale companies; the stock fell more than 7% on the day. Tesla’s Q2 results missed expectations: operating expense growth outpaced revenue growth, and the stock fell more than 14% in a single day.

Second trigger: Houthi attacks on Red Sea oil tankers, along with heightened tensions between Iran and the United States. Brent crude briefly broke above $100 per barrel, reaching a 7-week high, stoking concerns about an inflation rebound and higher-for-longer rate expectations, and weighing on risk appetite.

On valuation: after the Q2 earnings season, Nasdaq 100’s forward P/E (dynamic) fell to around the 30x range, below the valuation level at the lows in March. This suggests this adjustment is driven more by earnings expectations and sentiment than by a simple “valuation bubble burst.”

Impact

Semiconductors and the storage segment were the main drag behind this selloff. Weakness in the SOX index was directly transmitted to Nasdaq’s overall performance. There are signs of a rebalancing of funds from high-valuation growth stocks toward defensive sectors (such as consumer staples) and financials. This divergence implies the market is not trading a “full-blown economic recession”; it is recalibrating the investment return cycle for AI capital expenditures.

Outlook

The key short-term level is around 28,200 points (Nasdaq 100). If the weekly close falls below that, there is risk of further downside probing toward roughly 27,800. If it can recapture the 28,900–29,000 resistance zone, the adjustment may pause or turn into a healthy pullback. Over the medium to long term, Q4 is the critical window for testing whether AI capital expenditures can translate into real profits. During the Q3 earnings season, capital return metrics for cloud-computing companies will be a core watch item.

Risk warning: escalation in the Middle East situation, further upside in crude oil prices, and a delayed path for Fed rate cuts could all extend the duration of this adjustment. Also, be alert to the knock-on forced-liquidation risk facing highly leveraged capital in a tighter liquidity environment. DYOR

#Nasdaq 100 posts its first back-to-back weekly declines in three months