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AI's Risky September: Why Tech Giants Could Tumble
2 Sep
Summary
- September historically shows negative average returns for the S&P 500.
- Large AI stocks form nearly 34% of the S&P 500's value.
- AI stocks remain vulnerable to seasonal market downturns.
The stock market historically shows a peculiar pattern in September, being the only month with a negative long-run average return for the S&P 500, down approximately 1.1% between 1928 and 2025. This phenomenon, often called the September Effect, is partly attributed to portfolio managers rebalancing after summer vacations, increasing selling pressure.
This seasonal weakness poses a significant risk to dominant AI stocks, which now comprise nearly 34% of the S&P 500's value. Companies like Nvidia, Apple, and Microsoft are particularly exposed.
While recent Septembers have not consistently demonstrated this effect, with some showing gains in 2024 and 2025, the underlying vulnerability persists. AI stocks, as high-duration growth assets, can experience sharper declines, a fact highlighted by Nvidia's 10% drop in September 2023.
