QQQ Fund Repeats Rare Decline and Recovery Pattern for Only the Fifth Time
After a 6.5% drop, the Invesco QQQ Trust ETF, which tracks the Nasdaq-100, nearly recovered its losses over several trading sessions.
Previously, the fund first lost over 5%, then showed three sessions with gains of at least 1%, including two sessions with increases of more than 2%, without a comparable decline. All prior episodes occurred during the dot-com bubble or its subsequent collapse, and after each drawdown, the decline reached at least 59%.
The current situation is compared to that period in the article but differences are also noted. Currently, the growth of the artificial intelligence market is primarily supported by large profitable companies, including Nvidia, Alphabet, and Microsoft. During the dot-com boom, the market was filled with hundreds of unprofitable startups.
The valuation of QQQ is now lower than at the peak of the dot-com bubble. However, risks remain, associated with infrastructure spending financed by debt and the cyclicality of chip demand. Actual data do not yet indicate an imminent bubble burst: demand for AI infrastructure exceeds supply, and CoreWeave has assured investors of its ability to finance further expansion.
