Nasdaq Sell-Off: Why I See a Buying Opportunity in US Stocks

Written November 6, 2026, using prices as of the November 5 close (Yahoo Finance and StockAnalysis) and the news sources linked below. Markets are moving fast, so verify current numbers.

On October 10, with QQQ near a record, I wrote that a 10–20% pullback was normal and worth preparing for (my QQQ correction post). I didn't know the date or the trigger, and I'm not claiming I did. Now it's here in force. After this week's sell-off I think US stocks, and AI stocks in particular, are offering the best entry points I've seen in a while. Here's my reasoning, the data behind it, and what could prove me wrong.

What Happened to the Stock Market on November 5?

It was a rout. The Nasdaq-100 fell about 6.3%, the S&P 500 about 4.4%, and the Dow shed roughly 1,800 points. The chip index dropped 12.3%, its worst day in around six and a half years. Nvidia lost about 9.3%, wiping out its gains for the year, and Micron and AMD each fell about 17% (CNN, Yahoo Finance).

Analysts pointed to a mix of fears: doubts about whether the huge AI spending will pay off, concern that data center construction could slow, and worry that the midterm election results could lead to tighter AI rules and less spending (NBC News). It added to the AI-spending scare that began when Alphabet reported negative free cash flow a week earlier (see why GOOGL fell 13%). The damage came on top of the slide I covered in my Nasdaq pullback post.

QQQ closed at $647.05, 14.8% below its record close of $759.66. That is the biggest decline of this pullback so far, and it crossed the roughly $660 level I said I'd want to add more QQQ near. Futures were pointing higher on Friday morning, but one bounce proves nothing.

Reason 1: AI Valuations Look Far More Reasonable Than a Few Months Ago

For about two years the main worry about AI stocks was price: they had run so hard that any stumble would be punished. That worry has eased, because after this drop several of the leaders trade at multiples that don't look stretched for the growth involved:

To keep this honest: only some of these are under 20. Nvidia is about 15 times forward earnings, Meta about 18, and Alphabet about 20 (about 15 on trailing earnings, and its revenue grew 25% last quarter, with Cloud up 103%). Microsoft and Amazon sit above 25. But the market as a whole is nowhere near the 1999–2000 picture, when the Nasdaq-100 traded around 60 times forward earnings against roughly 23 today. That's a big difference, and it's the main reason I don't think this is a replay of the dot-com crash.

A few caveats I take seriously. Forward P/E depends on analysts' estimates, and estimates can be cut. One long-term measure, the cyclically adjusted P/E, still looks very high for the Nasdaq-100 (about 59, per Siblis). And "cheaper" is not the same as "cheap": Alphabet's free cash flow is thin against its value, and it's getting thinner while spending climbs.

Reason 2: Almost Nobody Wants the AI Build-Out to Fail

My second reason is about incentives. The biggest companies are spending roughly $700 billion on AI infrastructure in 2026. Governments treat AI as a strategic priority, and the businesses and workers depending on this buildout are spread across many countries and political camps. I struggle to find a large group that profits from the whole thing collapsing, and that makes me expect the investment to continue, even if it slows.

I want to be careful with that argument, because wanting something isn't the same as getting it. Plenty of people backed the internet in 1999, and QQQ still fell about 83% from its 2000 peak. And policy risk is real: it's one of the things that scared the market on November 5. If rules or politics actually cut data center spending, that would change my view.

Reason 3: Pullbacks Like This Are Common, and the Recent Ones Healed Quickly

Since mid-2024, QQQ has had four completed pullbacks of 10% or more. This is the fifth, and at 14.8% down it's already bigger than three of the four:

What I find encouraging is how fast the last four recovered. Each regained its prior peak within about 16 to 24 weeks of the top. My thinking is that this one will rhyme with them, but I'm not treating it as certain. Here is the other side of the ledger:

The 2022 decline took about two years to heal, and the 2000 crash far longer. So I don't believe in the idea that every drop is a quick V. What I take from the data is narrower: in the current cycle, buyers who stayed patient and bought sensible things were rewarded each time, and the odds don't tell me this has to be the exception.

What I'm Doing About It

I've started deploying a little cash at a time, into NVDA, AMZN, GOOGL, SMH and QQQ, rather than trying to catch the bottom. The pullback ladder from my earlier post is a useful way to think about it. Measured from the $759.66 record close:

These are levels I'm watching, not predictions. A sell-off can extend, which is why I stage purchases and keep some cash back. I also keep the same rules as always: no single stock or asset above 10% of my portfolio, and smaller caps for riskier names (see my diversification and sizing post). If you prefer to remove timing from the decision, steady buying works too, and the DCA calculator shows how.

What Would Change My Mind?

• Revenue or profits at the big cloud and AI companies actually shrinking, not just growing more slowly.
• AI spending being cut, whether by companies, or because of new rules that slow data center build-outs.
• Credit stress, or rising yields as AI companies borrow heavily.
• A decline that keeps going past 25% while earnings estimates fall alongside it.

FAQ

Is this financial advice?

No. It's my personal opinion, for education only, and it says nothing about what's right for your portfolio.

Why did the Nasdaq fall so much on November 5, 2026?

Several fears hit at once: doubts about whether AI spending will pay off, worries about a slowdown in data center construction, and concern that the midterm election results could bring tighter AI rules. The Nasdaq-100 fell about 6.3%, the S&P 500 about 4.4%, and the chip index about 12.3%, its worst day in roughly six and a half years. Nvidia fell about 9.3%.

Are AI stocks cheap now?

Some look reasonable, not all. At the November 5 close Nvidia traded at about 15 times forward earnings, Meta about 18, and Alphabet about 20 (and about 15 on trailing earnings), while Microsoft and Amazon were above 25 on forward earnings. The Nasdaq-100 as a whole is around 23 times forward earnings, versus roughly 60 at the March 2000 peak.

How often has QQQ fallen 10% or more recently?

Four completed times since mid-2024 (down 11% to 23%), and this is the fifth, now about 15% below the record. Each of the last four regained its prior peak within about 16 to 24 weeks. That has not always been the case: the 2022 decline took about two years.

Will this pullback recover quickly like the last ones?

Nobody knows. The last four recoveries were quick, but the 2022 bear market took about two years and the 2000 crash took far longer. I treat the quick recoveries as encouraging evidence, not a promise.

How would I approach buying during a sell-off?

In stages, with levels decided in advance, and with every position sized so a large further drop is survivable. Personally I never let a single stock or asset exceed 10% of my portfolio. A sell-off can extend, so I don't commit all of my cash at once.