Bear market alert: ASX 200 tech shares down 24% since September peak

ASX 200 tech shares are in a bear market, with the S&P/ASX 200 Information Technology Index (ASX: XIJ) down 24% from its peak.

A bear market is defined as a 20% (or more) fall from the most recent high point.

The ASX 200 tech stock index reached an all-time high of 3,060.7 points on 19 September.

Yesterday, the index closed at 2,317.6 points, down 743 points in just a little over two months.

By comparison, the S&P/ASX 200 Index (ASX: XJO) hit a record 9,115.2 points on 21 October and has slipped 6.3% since its peak.

The other market sectors have also fallen from their recent highs, set between August and October, but not as dramatically as technology.

Healthcare is also in a bear market, down 23.6%, but that decline has occurred over 10 months since the sector’s peak on 31 January.

Take a look.

S&P/ASX 200 market sector	52-week high	When	Fall since the high
Materials (ASX: XMJ)	20,192.4 points	21 October	(3.4%)
Industrials (ASX: XNJ)	8,811.8 points	27 October	(3.6%)
Utilities (ASX: XUJ)	10,323.9 points	29 October	(4.8%)
Energy (ASX: XEJ)	9,460.2 points	27 August	(8.8%)
A-REIT (ASX: XPJ)	1,975.8 points	21 August	(9%)
Communication (ASX: XTJ)	1,986.2 points	22 August	(9.2%)
Financials (ASX: XFJ)	9,978.4 points	28 October	(9.7%)
Consumer Staples (ASX: XSJ)	12,992.9 points	26 August	(9.9%)
Consumer Discretionary (ASX: XDJ)	4,620.6 points	21 August	(13.2%)
Healthcare (ASX: XHJ)	46,575.4 points	31 January	(23.6%)
Information Technology (ASX: XIJ)	3,060.7 points	19 September	(24.3%)

Why are technology and healthcare in a bear market?

ASX 200 tech and healthcare shares are in bear territory partly because each sector’s largest company has been significantly derated.

In the tech sector, WiseTech Global Ltd (ASX: WTC) shares have fallen 51% from their 52-week high of $134.26 on 5 December 2024.

Governance concerns have plagued the logistics software supplier this year, along with investors’ disappointment with FY25 earnings.

In the healthcare sector, CSL Ltd (ASX: CSL) shares are down 37% since their 52-week high of $290.32 per share on 8 January.

The global biotech has been hit by weaker global flu vaccine demand and is undergoing a major restructure, including 3,000 job cuts.

It’s notable that ASX 200 healthcare shares have fallen 23.6% over 10 months, while tech shares have plummeted 24.3% in two months.

This may indicate that ASX 200 tech shares are facing other immediate tailwinds.

One of them is the concern that artificial intelligence (AI) is creating a market bubble.

We saw this play out last week, with markets experiencing high volatility ahead of a quarterly report from AI chip giant Nvidia Corp (NASDAQ: NVDA).

This led to significant fluctuations in the ASX 200, with technology the worst-performing sector of the week, falling 4.07%.

Joe Koh and Elan Miller, portfolio managers of Blackwattle’s Large Cap Quality Fund, said many clients are asking about an AI bubble.

Koh and Miller said uncertainty over further interest rate cuts was another factor weakening ASX 200 tech shares in recent weeks.

They commented:

Some of the weakness was company-specific (such as the ASIC investigation into Wisetech executives’ share trading), but there was also increasing concern around the health of both US and Australian economies.

Higher interest rate expectations following the September inflation numbers also affected growth names in the IT sector, whose earnings and cash flows are further into the future and are therefore more impacted by higher discount rates.

Look outside the tech sector for AI gains: expert

Joe Davis, Vanguard’s Global Chief Economist, expects a rotation out of tech shares as AI matures.

He suggests investors will need to look beyond the tech sector if AI does, indeed, transform the global economy, as markets expect.

Davis said:

In every technology cycle, the firms producing the new technology do initially outperform (sometimes by fantastic or even “irrational” levels); but as the technology spreads, it is non-tech companies that benefit.

That is what happened with manufacturers and service companies during the age of electricity.

Similarly, in the age of AI, health care or financial companies could hold the most transformational potential, implying a rotation in stock outperformance, with the best returns shifting from technology stocks to other sectors.

ASX 200 tech share prices in 2025

Here is how the biggest ASX 200 tech shares by market cap are faring in 2025 so far.

WiseTech shares are down 47% in the year to date.

The Xero Ltd (ASX: XRO) share price is down 28%.

TechnologyOne Ltd (ASX: TNE) shares are down 0.1%.

Nextdc Ltd (ASX: NXT) shares are down 9.3%.

The Life360 Inc (ASX: 360) share price is up 84%.

Codan Ltd (ASX: CDA) shares are up 85%.

Megaport Ltd (ASX: MP1) shares are up 87%.

Dicker Data Ltd (ASX: DDR) shares are up 21%.

The Iress Ltd (ASX: IRE) share price is down 2.2%.

The Siteminder Ltd (ASX: SDR) share price is up 5.9%

The post Bear market alert: ASX 200 tech shares down 24% since September peak appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Life360, Megaport, Nvidia, SiteMinder, Technology One, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Dicker Data, Life360, SiteMinder, WiseTech Global, and Xero. The Motley Fool Australia has recommended CSL, Nvidia, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.