The decline in US technology stocks in recent months signals not just a price correction, but a deep unraveling in the market structure. The TMT momentum factor, an indicator tracking the fastest-rising technology, media, and telecommunications stocks in recent times, has fallen 62% from its peak. This decline is even sharper than the losses seen during the bursting of the Dot-Com bubble in 2000 and the 2008 Global Financial Crisis.

What's behind this decline?

There's no single reason behind this picture. Over the past two years, investors have approached growth in the artificial intelligence field with great faith. However, this optimism has brought with it intense borrowing. Margin debt on US stock exchanges has reached record levels. Investors often bought AI stocks on credit. When prices began to fall, brokerage firms demanded additional collateral. Investors who couldn't find cash were forced to sell other assets. This further deepened the sell-off.

What Does This Mean for Individual Investors?

For you, the most important part of this process is not only understanding what is happening, but also discerning what isn't. This decline doesn't mean AI is a hoax. However, the market is now questioning when companies' spending on this technology will translate into profit. While growth in core business lines is slowing for giants like Alphabet, Amazon, and Meta, spending on AI infrastructure continues to rise. This imbalance is testing investors' patience.

In the coming period, markets will want to see tangible returns on these company expenditures. If companies can maintain their profitability, confidence can be restored. However, if spending continues to rise faster than revenue growth, the pressure may persist. At this point, it will be important for you to review your own risk tolerance and portfolio allocation. Such market shifts generally require a long-term perspective.

Do you think this decline is an opportunity for technology stocks, or the beginning of a longer repricing process?

This is not investment advice.
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