Jeremy Siegel of WisdomTree warns that the Nasdaq Composite index faces a potential decline of up to 30 percent. This risk is tied to the high concentration of AI-linked technology stocks within the index, which makes the market vulnerable to shifts in investor sentiment regarding artificial intelligence.
The Nasdaq Composite closed last Friday at 26,140, marking a weekly decline of approximately 4.5 percent. On the following Monday, the index recovered, climbing 1.11 percent to finish at 26,430.89. During that session, the S&P 500 added $300 billion in market capitalization.
Market participants are currently focused on upcoming earnings reports from companies such as Meta Platforms and Tesla. Investors are seeking evidence that heavy capital spending on AI infrastructure is successfully translating into durable revenue growth and improved productivity.
Siegel notes that historical cycles of high capital expenditure often led to excess capacity and compressed returns. While he maintains long-term optimism for AI, he highlights that high interest rates and financing costs for large-scale projects remain significant near-term risks.
