And you thought this week has been painful for the tech trade.

If history is any guide, the pain for tech may only be just beginning!

The S&P 500 tech sector has seen six pullbacks of 10% or more since 2023, points out Truist chief markets strategist officer (chart below), including the current one. But four of the six plunges have ranged from 14% to 27%.

"The story is no longer simply about the strength of AI demand. Wall Street is increasingly demanding evidence that heavy investment will translate into durable profits and cash flow," Lerner says.

The tech sell-off could continue. · Truist

That's putting it lightly.

The AI trade took a serious beating Friday, with more than $1 trillion in market value wiped away as investors fretted about weakening cash flow profiles of Big Tech as it spends aggressively on AI. The news on the cash front worsened as the weak went along.

Google showed negative free cash flow in the third quarter when it reported mid-week. That was followed by another free cash flow negative call out when Amazon reported Thursday evening.

A week ago, Meta posted negative free cash flow for the first time since 2012.

None of these top tech names suggested their AI spending would be slowing down, quite the contrary.

The Nasdaq 100 went onto tank 3.4% while the broader S&P 500 fell 1.8%.

The S&P 500's tech sector tumbled more than 4.2%.

"The disruption caused by AI is on full display during tech earnings and the uncertainty around which names and sectors will be the disruptors vs the disrupted," Yorkville Ives partner Dan Ives said. "This is not the time to panic and sell all the tech winners and head into the bunker…as painful as this week is the underlying signs from enterprise AI buildouts are actually more validated than a week ago…given what we heard front and center from the hyperscalers combined with last week's Meta and SpaceX (SPCX) numbers. That said, tech players raising money via the bond market, equity offerings, ATMs, etc. has put further pressure on the sector and adding to the overhang seen this week."