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Big Tech Fatigue set US equities for Sector Rotation

ADMIN || 4th February 2026

Small caps are taking the baton from big tech as a renewed selloff in software and AI-linked names drags on the Nasdaq 100 and stalls the broader market advance.

Fears that automation tools are starting to disrupt core business models have triggered persistent selling across growth-heavy technology. Adding to the unease, Advanced Micro Devices reported fourth-quarter capex of $222 million, missing estimates of about $231 million, after the bell Tuesday. That shortfall lands at a moment when markets have heightened sensitivity to any sign of retrenchment in AI-related spending.

Beneath the surface, market breadth is telling a different story. Most S&P 500 stocks are still advancing, equal-weight benchmarks are holding up better than cap-weighted indexes, and leadership is rotating toward cyclicals and value. That divergence underscores how narrow the market’s engine has become after years of dominance by a handful of megacap tech stocks. With that leadership now wobbling, gains elsewhere are struggling to translate into index-level momentum.

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