By Islam El-Sakka
Technology stocks suffered a sharp sell-off last week as investors grew wary of massive spending on artificial intelligence infrastructure without immediate profits. Google parent Alphabet dropped more than 13% in a single day, wiping about $500 billion off its market value, while Intel plunged 28%. Chipmakers AMD, Nvidia and Marvell also posted smaller declines, dragging down the tech-heavy Nasdaq index.
Major tech firms see sharp declines
Alphabet's share price is down roughly 12% over the past week and nearly 11% since the start of 2026. Despite its size, Google accounts for only about 3% of a typical S&P 500 tracker fund. The Vanguard S&P 500 Accumulation ETF, for example, fell just 3% over the week but remains up more than 10% year-to-date, illustrating the cushioning effect of diversification.
Impact on ISAs and diversification
The hit to an individual ISA depends on how concentrated its holdings are. A portfolio heavily weighted in a few US tech stocks will feel the pain far more than one spread across a broad index. Tom Stevenson, investment director at Fidelity International, noted that while the Nasdaq endured its worst month in 18 months — down 5.3% in October — the broader S&P 500 slipped only 0.9% and the Dow Jones Industrial Average actually rose 1.7%. The Russell 2000 small-cap index gained 1.3% last week alone, suggesting a possible rotation away from mega-cap tech.
Pension long-term perspective
For pension savers, the same diversification principle applies, but the long investment horizon matters. Lisa Picardo, chief business officer UK at PensionBee, said short-term volatility is normal and reactive changes can do more harm than good. Many workplace pensions hold significant exposure to large US tech firms through global equity funds, so a downturn in AI-related stocks can knock pension values. However, pensions are typically spread across regions, sectors and asset classes, which helps absorb shocks in any single area.
