The Nasdaq endured a historic collapse on Friday, shedding an unprecedented $1.71 trillion in market value in what analysts say was the largest one-day dollar loss ever recorded by the technology-heavy exchange.

The dramatic sell-off was fueled by a combination of factors, including unexpectedly strong economic reports, growing concerns over interest rates, weakness across artificial intelligence-related stocks, and escalating geopolitical tensions.

By the closing bell, the Nasdaq Composite had tumbled 4.18%, its steepest daily decline since April 2025.

Although the percentage drop was less severe than some of the market routs witnessed during the height of the COVID-19 panic in 2020, the sheer size of the losses eclipsed all previous records because of the enormous valuations now attached to major technology companies.

During the pandemic-era market turmoil, investors also endured staggering losses. On March 9, 2020, the Nasdaq slid 7.3%, eliminating approximately $825 billion in market value. Three days later, the index plunged 9.4%, wiping out roughly $1 trillion. On March 16, 2020, the Nasdaq cratered 12.3%, destroying an estimated $1.1 trillion to $1.3 trillion in value.

The only comparable declines in percentage terms remain the crashes of 2020 and the aftermath of the 1987 market crash, when the Nasdaq plunged 11.4% and the Dow Jones Industrial Average suffered its infamous 22.6% collapse.

Even so, Friday’s sell-off appears to have set a new record for the largest single-day destruction of shareholder value in Nasdaq history.

Market observers pointed to several catalysts behind the sharp decline.

One major factor was stronger-than-anticipated employment data, which caused investors to rethink expectations that the Federal Reserve might soon begin cutting interest rates.

Higher borrowing costs tend to have the greatest impact on fast-growing technology firms because much of their valuation is tied to earnings expected years into the future.

At the same time, investors became increasingly uneasy about the enormous sums being poured into artificial intelligence projects and semiconductor infrastructure.

Several AI-focused companies and chip manufacturers came under heavy selling pressure after disappointing industry forecasts raised doubts about whether current spending levels can ultimately generate sufficient returns.

Traders also expressed concern about future capital demands tied to large-scale technology and aerospace projects, including anticipated fundraising activity connected to SpaceX-related ventures. Some market participants fear such fundraising efforts could draw investment dollars away from publicly traded stocks.

Geopolitical concerns added further pressure. Ongoing tensions involving Iran remained a major focus for investors, while the continued closure of the Strait of Hormuz fueled worries about energy markets, international trade, and renewed inflationary pressures.

Those uncertainties have complicated the outlook for policymakers and increased concerns that stock prices may have become stretched after months of gains.

Volatility surged throughout the day as investors rushed to reduce exposure across a wide range of assets. The selling was not limited to equities, with cryptocurrencies, bonds, and even traditional safe-haven investments also coming under pressure.

Bitcoin, gold, and fixed-income securities all experienced notable declines as traders sought to raise cash and reduce risk.

Market commentator and fund manager Mitch Feierstein argued that investors should remain cautious despite signs of economic strength.

“The Trump administration has drastically improved the economy. However, the Biden dumpster fire, combined with too-late Jerome Powell’s misguided policies at the Federal Reserve, created the highest inflation in 40 years, gasoline prices 30% higher than during the Iran conflict, and grotesque bubbles in every asset class,” Feierstein said.

Feierstein also cited a range of additional risks, including rising oil prices, growing debt burdens, lingering supply-chain disruptions, concerns in private credit markets, and slowing economic activity in parts of Europe and Asia.

“While it’s impossible to call the top of a bubble, trading in many of these AI issues has become a form of casino capitalism,” Feierstein added.

Other analysts noted that technology stocks had risen so dramatically in recent months that even minor disappointments were capable of triggering a sharp reversal.

After a prolonged rally driven by enthusiasm over artificial intelligence, investors appeared quick to lock in profits at the first signs of weaker guidance or questions about future growth.

Whether Friday’s plunge proves to be a short-term correction or the beginning of a broader market reset remains unclear.

What is evident, however, is that the massive valuations created during the AI boom have magnified the consequences of even relatively modest declines, turning a 4.18% drop into the largest one-day dollar loss ever suffered by the Nasdaq.