Tech stocks are crashing. Will AI kill my ISA and pension?

Investors have been used to seeing technology stocks – and particularly those associated with artificial intelligence – bring in money to send their share prices higher.

But last week was notably different.

Fears over the amount of expenditure on the AI buildout, as well as a lack of immediate profits, saw a number of massive firms take a stock market tumble, with Google owner Alphabet suffering more than 13 per cent one-day drop. Intel saw more than a full quarter of the company valuation sliced away – a stunning 28 per cent share price crash.

Chip-makers AMD, Nvidia, Marvell and others have all suffered smaller falls, along with other tech giants with some involvement in AI.

It all has people asking the question: is the AI craze going to cost me personally?

How do I know if my money is invested in AI?

There are two main ways that your money might be affected by falls (or rises) of companies around AI.

The first is if you invest directly in them: buying company stock and holding it in any investment vehicle, such as your stocks and shares ISA or a self-invested personal pension (SIPP).

Second, and more likely for most, is if you either buy broader funds (such as ETFs) in your investments, or else have it all done for you automatically. That could be for example if you simply put money into an ISA and have selected a “risk level” with your provider, who then trades accordingly.

But it’s also the case if you have any kind of pension too – such as a workplace pension you pay into through salary sacrifice.

Impact on ISAs

The actual impact on your ISA will depend on how much of your total portfolio is invested in each type of components that has changed price.

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In other words, if you have a £10,000 total ISA and have all of it in just two or three individual American stocks, one of which has dropped by a big amount, you’ll of course see a much greater drop in your portfolio value than if your entire amount was invested in the S&P 500, the popular index which comprises 500 of the biggest firms in the US.

Taking Google as an example, its share price is down 12 per cent over the past week, leaving it almost 11 per cent down since 1 January.

But Google, as big as it is, only currently comprises around 3 per cent of a fund which covers the S&P 500. One such fund, the Vanguard S&P 500 Accumulation ETF, is down just 3 per cent over the past week – and is still up by more than 10 per cent since the start of 2026.

This showcases why experts continually preach diversification within investment portfolios, so your overall holding isn’t unduly impacted by one stock’s poor performance.

Tom Stevenson, investment director at Fidelity International, pointed out that while tech stocks dropped across October, the wider US market fared very differently across the month.

“Another bruising week [last week] for technology stocks closed out the worst month for the Nasdaq index in a year and a half. But the broader market held up better,” he said, comparing the main index of 500 of the biggest American companies, the tech-focused index and the primary group of smaller businesses Stateside.

“The numbers tell an interesting story. Last week, the S&P 500 fell by 0.6 per cent and the tech-heavy Nasdaq was 2 per cent lower. But the Russell 2000 small cap index was 1.3 per cent up on the week.

“For the month of October as a whole, Nasdaq was 5.3 per cent down, much worse than the S&P 500’s 0.9 per cent decline. The Dow Jones Industrials index rose by 1.7 per cent.”

For investors, the question now is if they face short-term mistrust of these particular AI-focused stocks, or if will it broaden out, beyond tech and the US, to see equities more widely face a downturn?

For Stevenson, “plausible cases can be made for both” cases, either a “healthy broadening out of the ongoing bull market” – in other words a rotation of some profits moving into different areas – or a first look at “a wider correction for shares.”

Barclays analysts have taken a more firm stance, suggesting it the current financials do not suggest the end of the bull run, when it comes to tech and the AI buildout.

Impact on pensions

When it comes to pensions, the same principle of diversification applies, but there’s also an important difference to remember: the long-term nature of them, with many people still having decades ahead of them for investments to compound.

A short-term drop, Lisa Picardo, chief business officer UK at PensionBee, shouldn’t therefore cause undue concern. “Recent falls in technology shares are a reminder of how quickly market sentiment can shift when expectations become overly optimistic, valuations outpace earnings and are indiscriminately positive across the sector,” she told The Independent.

“It’s worth remembering that pensions are designed for the long term. Market volatility can be unsettling, especially when sharp falls make the headlines, but fluctuations are a normal part of investing.

“For those still some way from retirement, making reactive changes to a pension strategy in response to short-term market movements could do more harm than good. Instead, pension savers should focus on maintaining a well-diversified portfolio that reflects their investment time horizon, income needs, personal appetite and tolerance for risk and overall goals.”

All the same, if you have noticed a drop in the value of your pension, it might be simply a result of how many investments are structured these days: the US economy is the biggest, the companies working there are many of those we know and use day-to-day because their technologies and products are vital in the modern world.

“Many diversified pension portfolios have significant exposure to large US technology companies, either through direct holdings or global equity funds,” Ms Picardo added.

“As a result, a significant downturn in AI-related stocks could have a knock-on effect on pension values, even for savers who have no direct investment in the AI sector. However, pensions are generally spread across a broad range of companies, regions and asset classes, helping to cushion the impact of falls in any one area of the market.”

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.