Indexes Plunge, Over $2 Trillion Wiped Out
US tech stocks were sold off sharply on October 30 as investors worried whether massive artificial intelligence spending can deliver sufficient returns, with both the Nasdaq Composite and the S&P 500 posting their worst single-day performance since June this year. Since the start of this month, the Nasdaq market has shed over $2 trillion in market value. Wall Street analysts generally believe market sentiment toward AI has shifted from the past "hope and dreams" phase to a "show results" phase, with investors scrutinizing actual returns on AI investment more closely and shifting funds into defensive assets such as consumer staples and government bonds.
Alphabet and Meta Post Negative Cash Flow
The selloff was mainly triggered by earnings reports from tech giants. Alphabet plunged more than 12% on Thursday, wiping out about $500 billion in market value in a single day, mainly as investors worried its core search advertising business could be affected by AI chatbots. At the same time, Alphabet's spending on AI development surged, leading to negative free cash flow for two consecutive quarters for the first time, falling another 1.4% on Friday for its worst single-month performance on record. Meta Platforms also posted its first quarterly negative free cash flow since 2012. Saxo Bank strategist Neil Wilson noted investors are no longer looking only at capital expenditure and want to see tangible returns.
Intel Plunges, Amazon Heavy Capital Spending
Chipmaker Intel beat expectations for third-quarter profit, but forecast fourth-quarter revenue below market expectations, with CFO David Zinsner saying cash spending this year is expected to exceed revenue and that weakness in the personal computer market will last at least into the first half of next year, sending its shares down 28.58% on Friday, the second-largest single-day drop on record. Amazon CEO Jassy expects 2026 capital expenditure to reach about $220 billion, mostly for AWS infrastructure buildout, with even more investment expected in 2027, comments that sent Amazon shares down as much as 10% after hours, closing down 1.4% on Friday.
Chip Supply Chain Under Pressure, Inference Costs in Focus
Amid concerns over AI investment, chipmakers came under pressure, with Nvidia down 4.2% on Friday, the Philadelphia semiconductor index down 7.2%, SanDisk down 13%, AMD, Arm Holdings, Qualcomm and Marvell generally down about 10%, an ETF tracking dynamic random-access memory-related companies down 7%, and new cloud companies Nebius Group N.V. and CoreWeave down over 10%. Experts noted that building AI models requires huge capital expenditure and ongoing energy costs, unlike traditional software services. Gartner forecasts that of global AI-optimized infrastructure-as-a-service spending in 2026, AI inference will account for 55%, reaching $23.3 billion, above $19 billion for training. Jassy stressed that reducing per-unit AI costs is critical. Yaka managing director Paul Stanley believes AI is still at an early stage, while FHN analyst Chris Low believes the tech industry may slow.