For months investors have faced a dilemma - pay through the nose for technology giants trading at eye-watering multiples, or wait for a cheaper entry point and risk missing out on the year’s biggest bull run.

Those who chose to sit on the sidelines got a big opportunity to pounce Monday, when the Nasdaq 100 Index extended a three-day slump into the double digits at its lowest point. But only a minority took the chance to load up on shares of Nvidia Corp, Apple Inc and other Big Tech names, with many traders unconvinced that the selloff is over.

“I’m waiting for a better opportunity to buy,” said Dan Cook, chief strategy officer with Apex Trader Funding. “I want to see an indication that the pressure has relieved a bit.”

It was a sentiment echoed by numerous investors amid growing fears of a US recession and concerns that heavy spending on artificial intelligence (AI) is not yet paying off. While most said they were optimistic over the long run, few said they were diving headlong into the selloff.

“Until we get the next positive driver, the path of least resistance could be down,” Cook added.

The Nasdaq 100 Index rose 0.4% on Tuesday and remains about 13% below a recent peak.

Where that driver will come from, however, remains unclear. Six of the Magnificent Seven tech companies that have fuelled much of this year’s gains have already reported earnings, leaving traders waiting several weeks before AI-darling Nvidia reports on Aug 28. What’s more, in the wake of last week’s Federal Reserve meeting in which policymakers stood pat, the next gathering won’t be until September.

“Investors will have to wait until next week for significant economic releases from the US, with data on consumer sentiment, retail sales and inflation all due,” said AJ Bell investment director Russ Mould. “These could help point towards whether the Federal Reserve will cut rates in September and how far they might go.”

It hasn’t helped that earnings have painted a mixed picture. Alphabet Inc, Amazon.com Inc, and Tesla Inc all sank after their reports, which underlined concerns over issues including their growth prospects and spending plans. However, Meta Platforms Inc and Apple both rose following their results, and the group overall demonstrated positive trends for earnings stability and demand.

So far this season, 80% of companies in the S&P 500 tech index have topped earnings expectations, though fewer than 60% have for revenue, according to data compiled by Bloomberg Intelligence. Last quarter, 90% beat on earnings and 56% did on revenue.

The Nasdaq 100 finished Monday’s session down 3%, well off the 5.5% decline at the start of trading, but still its second-worst day since 2022 (the worst coming last month).

While dip buying helped soften the blow for some stocks, plenty of damage was done. Nvidia shares closed down 6.4%, erasing US$168 billion in market value, amid a report that its upcoming Blackwell chip will be delayed. Apple closed 4.8% lower after Berkshire Hathaway Inc cut its stake by nearly half. Nvidia is up 2.9% on Tuesday while Apple is 2.5% lower.

All of the bad news may be spooking retail traders. “Retail participants were aggressive net sellers” on Monday, JPMorgan Chase & Co strategists including Emma Wu wrote in a note, while institutional investors bought the dip.

And while the selloff has brought valuations down across the board, they’re far from bargain levels. The Nasdaq 100 is priced at 24 times profits projected over the next 12 months, according to data compiled by Bloomberg. While that’s down from about 28 times a month ago, it’s still above the benchmark’s 10-year average. Nvidia is priced at 31 times estimated earnings, while Apple and Microsoft Corp are trading around 29 times.

“Valuations aren’t screamingly cheap, but they are defensible,” said John Belton, portfolio manager at Gabelli Funds. “A lot of Big Tech are showing really strong growth, margin expansion, above-average earnings growth. They still deserve pretty healthy multiples, especially if we enter a more normalised rate backdrop.”

There were some bright spots amid Monday’s carnage. Advanced Micro Devices Inc rose 1.8% amid bets that it’s poised to benefit from the potential Nvidia setback. Chip equipment makers including ASML Holding NV and Lam Research Corp also rose.

“The market could be still very volatile, but you know, those six or seven or eight things that make up this perfect storm, maybe a couple of them go away and investors get back on the playing field,” said Ken Mahoney, chief executive officer of Mahoney Asset Management.

  - Bloomberg