WisdomTree’s Jeremy Siegel warns the Nasdaq Composite could fall as much as 30%. The risk grows if AI spending fails to deliver expected returns.
The warning arrives on the 39th anniversary of Black Monday, when markets are testing whether AI can regain momentum.
Why AI Spending Now Drives Nasdaq Risk
Concentration risk is the exposure a market index carries when a few large companies or themes dominate its value. The Nasdaq is heavily weighted toward AI-linked technology stocks, so a shift in that theme can move the whole index.
Siegel has repeatedly flagged risks in AI capital spending. He has compared the current cycle with past episodes. In those cases, real demand existed, but excess capacity later compressed returns for the biggest spenders. That history makes the current debate harder to dismiss.
Last week’s volatility came from several sources. Concerns over AI financing and hyperscaler debt issuance weighed on sentiment.
Elevated oil prices, higher yields and a spike in the VIX added pressure. The Nasdaq Composite closed Friday at 26,140 after a 2.15% drop, its worst week since June, down roughly 4.5%.
The Nasdaq climbed as much as 1.8% on Monday, peaking near 26,600 around midday, led by semiconductor and AI-infrastructure names.
It eased through the afternoon but stayed in green, finishing up 1.11% at 26,430.89. The S&P 500 also advanced, while the Dow held roughly flat.
Earnings from Meta Platforms and Tesla are due soon, and investors are watching whether AI spending translates into revenue growth. Investors have viewed the recent dip as a pause, and the rebound held through the close.
Could AI Disappointment Trigger a 30% Nasdaq Drop?
Siegel’s framing points to a revaluation concentrated in technology-heavy stocks.
A sustained failure of AI spending to produce durable earnings could trigger a sharp correction. On that path, the decline could reach roughly 30%.
AI-related names hold a historically high share of market value, so any disappointment could hit growth stocks broadly. That concentration is what makes the scenario plausible. Interest rates also matter because they shape how expensive it is to finance large AI projects through debt.
Siegel’s long-term optimism about AI has not changed, but a sharp intermediate correction has become a clearer near-term risk.
Investors will watch upcoming earnings and capital-spending updates for evidence that productivity and revenue gains are holding.
Siegel’s warning is conditional, but it highlights how heavily the index depends on one investment theme.
