Nasdaq closes worst month since March 2025 as AI spending fears trigger sharp sell-off
The Nasdaq closed its worst month since March 2025 after a bruising final session in October, as investors questioned whether the huge sums being poured into artificial intelligence infrastructure will pay off quickly enough.
The technology-heavy Nasdaq closed its worst month since March 2025 on Friday, ending October with a sharp sell-off as investors grew increasingly uneasy about the scale of spending on artificial intelligence infrastructure and the time it may take for that spending to generate returns.
The Nasdaq composite recorded its biggest single-day decline since June on Friday, leaving it 7.8 percent below its recent closing high. The Nasdaq 100 index of large non-financial stocks fell 3.5 percent on the day, putting it on the brink of a correction, generally defined as a fall of 10 percent from a recent high.
Reuters reported that more than $2 trillion in market value was set to be wiped from the Nasdaq 100 over the course of October, an amount slightly larger than the entire market value of SpaceX. The index had fallen more than 5.8 percent over the month before Friday’s session, as the artificial intelligence trade that powered much of the year’s rally ran into turbulence.
Chipmaker Intel bore the brunt of Friday’s selling, with its shares falling 29 percent in the session after it warned that it would burn cash this year, citing a weak personal computer market, manufacturing bottlenecks and heavy spending to expand production. Market reports described it as Intel’s worst single day since 1974. Social media firm Reddit fell 29 percent, while chipmaker Sandisk, one of the big beneficiaries of the AI capital-spending boom, dropped 13 percent.
The four largest so-called hyperscalers — Microsoft, Meta, Amazon and Google parent Alphabet — each fell between 1 and 2 percent on Friday, extending declines from earlier in the week. According to Capital Economics, cited by Reuters, the four companies have accounted for more than a third of all capital spending by current S&P 500 constituents over the past 12 months, and their share looks likely to rise further, a prospect investors are struggling to absorb.
Amazon added to the gloom by reporting negative free cash flow of $42.4 billion over the 12 months to 30 September, saying artificial intelligence investment accounted for most of a $94.8 billion increase in purchases of property and equipment from a year earlier. The company expects cash capital spending to reach about $220 billion in 2026. Alphabet suffered its biggest one-day percentage drop on record on Thursday after disappointing results in its core search advertising business and a sharp acceleration in cash burn, while Meta’s plans for a record $97.5 billion fundraising heightened concerns about shareholder dilution.
The unease spread beyond the United States. In Europe, the STOXX Europe 600 closed 0.36 percent lower at 646.75, with its technology sector index down 2.75 percent, its steepest daily drop since 7 July, although October was still the benchmark’s strongest month since June. Eurostat’s preliminary estimate put euro-area economic growth at 0.4 percent in the third quarter, down from 0.6 percent in the second quarter.
Analysts are divided on what comes next, and the coming weeks offer several possible turning points rather than certainties. Apple is due to report earnings next week and AI chip bellwether Nvidia reports in mid-November, either of which could calm or deepen the sell-off depending on the results. Market pricing compiled by CME FedWatch put the odds of a December interest-rate rise by the US Federal Reserve at 72 percent, while Morgan Stanley has forecast that capital spending on AI infrastructure overall will surpass a trillion dollars next year and JP Morgan expects $900 billion to be spent in 2026 alone, rising to $5.5 trillion by 2030.
Figures in this post are as reported at the close of trading on Friday 30 October 2026, checked at 18:52 PKT on Saturday 31 October 2026. Market prices move constantly, and the figures above describe that close rather than live trading.
This post is market news information only, not financial advice.
