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Technology stocks are being sold off.

Zhitong Finance APP learned that the Nasdaq 100 Index, a technology stock index composed of about 100 of the largest non-financial companies in the Nasdaq Composite Index, has fallen more than 9% from its all-time high of 20,675 points set earlier this month to 18,757 points. The main driving factor is not fundamental issues, but investors' shift from long-term high-performing technology stocks to lower-valued areas in the market.

Part of the reason for the stock price decline is related to shareholders' concerns about whether technology companies can realize returns on tens of billions of dollars of artificial intelligence-related investments in the coming years. Analysts expect Meta (META.US), Microsoft (MSFT.US) and other companies to increase capital expenditures after Alphabet (GOOG.US, GOOGL.US) said in its earnings call that the risk of underinvestment is greater than the risk of overinvestment. However, analysts still expect that companies in the Nasdaq 100 index will achieve higher returns on net assets than companies in the S&P 500 index as a whole in the next few years.

While there is little doubt that these companies will continue to grow profits, remain cash-rich, and maintain their competitive advantages in the coming years, there is a limit to the price investors are willing to pay for these strong returns, raising concerns about the rate of return.

Bobby Molavi, head of execution services at Goldman Sachs, said the sell-off in technology stocks was partly due to "over-concentration of market positioning." This also means that at a certain price, portfolio managers will start buying these growth stocks again.

The Nasdaq 100 is stabilizing at an important level. The index stabilized around 18,750 on Tuesday afternoon EST, just above its 100-day moving average of 18,709, according to FactSet data. Typically, the index breaks sharply below this level when the investment environment changes significantly, such as when interest rates spike in 2022. However, since then, this level has served as "support" for most of the past 12 months. What's more, the current situation is not as severe as in 2022, so it would not be surprising if buyers continue to enter the market at this level.

As of the close of Tuesday, Nvidia (NVDA.US) closed down more than 7%, META fell 0.54%, and Alphabet rose slightly; Microsoft fell 0.9%, and fell more than 6% after the market after the release of its latest financial report.