The Nasdaq Composite slipped on Tuesday as selling in semiconductor stocks offset gains elsewhere on Wall Street. The index fell 0.22% to 24,876.91, while the Philadelphia Semiconductor Index dropped 4.5% and remained well below its June record.
In this article, experts at Fonndure examine whether the Nasdaq can recover above 25,000 or whether concerns about AI spending and chip-sector valuations could trigger a deeper correction.
Chip Stocks Remain Under Pressure
Semiconductor companies have been among the strongest performers of 2026, but sentiment has changed sharply. Investors are questioning whether the enormous sums being spent on AI data centers will produce returns quickly enough to justify current valuations.
The market is no longer rewarding AI investment without clear evidence of improving profits and cash flow.
That helps explain why even strong earnings have failed to reassure investors. High expectations mean companies now need to deliver solid results, stronger margins, and confident guidance.
Selling Volume Adds to the Warning
The first chart combines Nasdaq candlesticks with trading volume.
Recent declines have been accompanied by stronger volume, suggesting the pullback is not being driven only by light profit-taking.
Falling prices combined with rising volume usually indicate that sellers are becoming more committed.
A rebound on weak volume may struggle to last, while a recovery supported by stronger buying activity would look more convincing.
Image 1: Nasdaq Composite Candlestick Chart With Trading Volume
Resistance Remains Near 25,000
The first major barrier is positioned around 25,000. A firm daily close above this level could expose 25,250, followed by 25,500.
A sustained move above 25,250 would provide stronger evidence that buyers are regaining control.
However, the Nasdaq may struggle to clear these levels unless technology earnings reduce concerns about capital spending and future margins.
Support Begins Around 24,800
The first support area is positioned near 24,800. Holding above this level would keep the index within its recent consolidation range.
A break below 24,800 could expose 24,400. Further weakness may bring 24,000 into focus, particularly if semiconductor selling continues.
A sustained move beneath 24,400 would weaken the short-term structure and increase the risk of a broader technology correction.
Williams %R Shows Oversold Risk
The second chart uses Williams %R, which measures where the current price sits within its recent range.
Readings below -80 generally indicate oversold conditions, while readings above -20 suggest the market may be overbought.
The indicator is moving toward oversold territory as the Nasdaq approaches support.
That could encourage bargain buying, but oversold readings alone do not confirm that a low has formed.
A recovery above -80 would offer an early sign that selling pressure is easing.
Image 2: Nasdaq Composite Four-Hour Chart With Williams %R
Technology Earnings Face a High Bar
Several major technology companies are reporting earnings, and expectations remain demanding.
Investors are focused not only on revenue growth but also on spending, free cash flow, and how long AI investment will take to produce stronger returns.
Strong headline earnings may not be enough if guidance points to accelerating costs.
Clearer evidence of improving margins could stabilize the sector. Another round of expensive spending plans may place further pressure on the Nasdaq.
Other Sectors Provide Some Support
The wider US market has shown more resilience than technology. The S&P 500 and Dow performed better as investors moved toward healthcare, consumer staples, materials, and other less expensive areas.
Money appears to be moving away from crowded technology positions rather than leaving equities altogether.
That could still limit the Nasdaq’s recovery if value and defensive stocks continue attracting more interest.
The Federal Reserve Adds Another Risk
The Federal Reserve’s decision may create additional volatility. A hawkish message could lift Treasury yields and place more pressure on growth stocks.
Higher yields reduce the present value of future earnings, which tends to affect richly valued technology companies more heavily.
A softer Fed message could support a Nasdaq rebound, while a surprise rate increase would raise downside risk.
Trading Implications
The Nasdaq keeps a neutral-to-cautious short-term outlook while trading below 25,000.
A confirmed break above 25,000 could expose 25,250 and 25,500.
A move below 24,800 would weaken immediate momentum, while a sustained break beneath 24,400 could shift attention toward 24,000.
Improving earnings guidance and a recovery in chip stocks would support the bullish case. Rising yields and continued heavy-volume selling would favour further weakness.
Conclusion
The Nasdaq remains close to 24,900 as investors reassess semiconductor valuations and the profitability of the AI spending cycle.
Resistance is positioned near 25,000, 25,250, and 25,500. Support can be found around 24,800, 24,400, and 24,000.
The broader technology trend has not fully broken, but buyers need to reclaim 25,000 before confidence improves.