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Whenever the Nasdaq 100 slides more than 4% in a single day, as it did on Friday, it can feel like the stock market is crashing. Undoubtedly, it’s never fun when stocks experience their worst days in some number of months or even years. After all, historic stock market crashes tend to happen shortly after all is well, and the market is at or close to making new all-time highs (think the 2020 COVID market meltdown).
But, as a long-term investor, you probably won’t be all too thrilled with your results if you flinch anytime a day like Friday happens. Given the froth in the semiconductor industry, perhaps a bit of selling can act as a release valve so that the AI bull market can continue onward without running the risk of too much capital in a narrower part of the market.
Any way you look at it, corrections, even bear markets, can happen, and investors shouldn’t hit the panic button. If anything, there are genuinely cheap opportunities, not only within the tech sector, but within the AI theme. And if these names, like Microsoft (NASDAQ:MSFT | MSFT Price Prediction), continue to be dragged down, perhaps there’s an opportunity for value names to become even deeper with value.
Three IPOs on the horizon will likely move markets. The first and biggest lands tomorrow
As we await SpaceX, Anthropic, and OpenAI IPOs, all of which are a massive trio that could result in three multi-trillion-dollar juggernauts once the dust has settled (maybe $2+ trillion in the case of SpaceX), the tech sector and the rest of the market are entering uncharted waters.
Will there be capital taken out of the existing names to make way for these colossal newcomers to the market? If that exciting SpaceX IPO is massively oversubscribed (to the magnitude of 4x or so, at least the last time I checked), perhaps a bit of sector-wide rotation isn’t all too out of the ordinary, at least in my humble opinion.
There might be ample cash sitting on the sidelines to absorb the blow. But the big question is, will investors put the cash to work when the volatility takes things up a few notches? It’s hard to say. With decent, safe yields in cash and cash equivalents, the days of TINA (there is no alternative) are definitely over.
Whether it’s the IPO boom’s potential to cause a liquidity drain, fear of higher rates, or just exhaustion, the most crowded part of the AI trade (that would be the semis), investors should brace for an eventful second half of 2026. When the fleeing from tech concludes remains anyone’s guess. But, in my view, there’s no shortage of merchandise that’s at risk of being continuously marked down.
Still worth it to brave the dip in big tech?
At just 20.7 times forward price-to-earnings (P/E), Microsoft may very well be a market bargain that’s too good to overlook, even if the latest round of negative market momentum drags the Nasdaq 100 right into a bear market after the first of three massive IPO acts.
As Microsoft looks to move ahead with agentic AI in the enterprise while spending money to bolster Azure, I do think that investors might want to take a page out of the Bill Ackman playbook by going for the “quality” companies instead of pursuing the “new new thing.”
In my view, it’s cheap to go for old-fashioned quality nowadays, while it’s absurdly expensive to go for what’s new and hot. With the Nasdaq 100 down just over 7% from its high, there’s already quite a bit of damage done. How much more, though, remains the big question.