An estimated $2 trillion in market value was wiped from the tech-heavy Nasdaq-100 during October as investors grow increasingly skeptical that enormous spending on artificial intelligence will ever pay off.
On Friday, the Nasdaq Composite dropped 2.9% in its biggest one-day fall since June. Over the whole month, the Nasdaq shed about 5.2%, its worst showing since March 2025, while the S&P 500 slipped 1.2%, and the Dow – which includes many traditional businesses – still finished October up 1.5%.
Among the hardest-hit companies was Google owner Alphabet, whose shares plunged 12.6% on Thursday in its worst day on record. The slump was triggered by its earnings showing slower growth in search advertising, its core business.
While search advertising revenue still grew 12%, Google executive Philipp Schindler acknowledged that its AI Mode brings in less ad revenue per search than traditional results. At the same time, Alphabet is spending heavily on AI infrastructure, putting further pressure on its cash flow. The company’s net profit also slid 25% year-on-year, largely due to investment-related losses, while Thursday’s share plunge erased nearly $500 billion from its market value.
Amazon reported negative free cash flow of $42.4 billion over the preceding 12 months, largely due to AI investments, with its shares falling 1.4% on Friday. Chipmaker Intel came out worse, plunging 28.6%, its worst day since 1974, after forecasting weaker profits amid trouble in its PC and manufacturing businesses. Nvidia – which produces powerful chips used to train and run AI systems – slipped 4.2%, becoming the biggest drag on the S&P 500, while rival AMD dropped 10.9%.
Commenting on the slump, Globalt Investments senior portfolio manager Keith Buchanan, described the current state of the market as “scrutinizing” and “discerning”. “Last year was hope. This year is: At the end of day, how does this all work in real-world terms, like how to finance [it] and who gets the economics. Those questions are much more difficult to answer,” he told CNBC.
Enormous spending on AI and data centers has become a staple of US tech giants in recent years. Together, Microsoft, Meta, Amazon and Alphabet are projected to spend more than $700 billion on data centers, computing equipment and other long-term investments in 2026 alone, and much of it is AI-related.
According to various estimates, global AI-related investment is valued at between $900 billion and $2.7 trillion dollars this year, depending on the methodology. Companies are also borrowing more to finance expansion, fueling concerns among investors.
Market analysts meanwhile warn of further near-term losses. Bank of America strategist Michael Hartnett expects weakness until mid-November, while Morgan Stanley’s Mike Wilson says the S&P 500 could fall even further within weeks before recovering by year-end.
Other major tests for the US market are the midterm elections on Tuesday, which could reshape AI regulation, as well as quarterly results from Apple, Nvidia, AMD and Palantir, and Friday’s jobs report.
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