The technology-heavy Nasdaq fell 5.5 percent on Thursday, extending its decline to 12 percent since its October peak, EFN reported on Friday. In his column for the outlet, Jonathan Axelsson argued that the drop still reads as a narrow correction concentrated in AI-linked stocks rather than a broad market collapse. He said the weeks ahead will be decisive in showing whether that reading holds.
The picture looked milder closer to home. Sweden's Stockholm exchange closed down just 0.1 percent and finished near record levels, according to EFN. Axelsson noted that anyone who only checks closing prices could be forgiven for finding Thursday's dramatic headlines overblown, since the afternoon slide and the scale of the losses erased in the US were easy to miss.
Why it matters
The selloff matters because AI-related companies have carried much of the market's recent gains, and a sustained retreat there could spread well beyond the technology sector. For now, the numbers are mixed. Despite the fall from October's high, the Nasdaq is still up almost 5 percent since the start of the year, EFN reported. The broader S&P 500 and the Dow Jones, which lean less on technology, have each gained more than 7 percent over the same period.
Axelsson's reading is that this remains a contained pullback. The stocks under pressure are the ones that had been assigned very high valuation multiples, a situation he said many other companies would not recognize at all.
A pattern of sharp drops and fast recoveries
Thursday's move was not the first jolt of its kind during this strong stretch for equities, according to EFN. In June, the Nasdaq dropped more than 4 percent on AI jitters. July brought another weak patch: six consecutive losing sessions and an index decline of over 5 percent. Sentiment reversed quickly on both occasions, and by October the index had reached fresh records.
Axelsson contrasted the current episode with the dot-com unwind, when the Nasdaq fell more than 5 percent ten separate times in a single year. If losses of that frequency return, he said, the situation changes: other sectors and companies get dragged down almost regardless of their health.
He also pointed to signs of money beginning to move elsewhere. Some consumer companies that had struggled have started to stir, EFN reported, and there is a large group of small-cap firms with little connection to AI that investors had avoided while technology stocks dominated. In Axelsson's view, a healthy correction of overvalued AI names could push some of the capital that flowed into those companies toward sectors that are performing well but have drawn less attention.
What investors can do
For readers weighing their own positions, Axelsson offered a few practical points. Anyone holding technology stocks that have risen sharply can reasonably shift toward more defensive choices, he wrote. Missing the top is painful, he acknowledged, but very few investors manage to sell at the peak.
Those worried about a wider and more prolonged decline — someone preparing to buy a home, for example — might consider moving a larger share of their portfolio into bond funds, according to EFN. Axelsson also repeated a principle he said has almost always proven wise: keeping cash available when markets are turbulent. Such moments, he wrote, are often when investors can buy good companies that have become far too cheap, a pattern he attributed to Warren Buffett's repeated practice. He closed with the investor's familiar line about being fearful when others are greedy and greedy when others are fearful.
Other Swedish outlets framed Thursday's session more sharply. Aftonbladet described an "AI bloodbath" on the US market and cited talk of panic, while Omni reported that the AI-driven slide was spreading alarm among wealthy investors, according to the headlines EFN's summary linked to. DI quoted Hagströmer saying the market had been waiting for a reason to sell, and Dagens Nyheter noted it is impossible to know whether this is the start of a crash.
The next test is whether the market can shake off the current gloom and refocus on the underlying split between richly valued AI names and the rest of the market — or whether the selling broadens.
