The Nasdaq Composite posted a slim loss on Friday, while the Nasdaq index of the largest technology companies listed in the US ended October with its worst monthly slide since March 2025.
The reversal followed a year in which technology stocks and enthusiasm for artificial intelligence helped lift the S&P 500 index 11 per cent in 2026. More than 100 companies have reported so far, and third-quarter S&P 500 earnings are on course to rise more than 32 per cent from a year earlier. Yet investors have focused on whether the companies at the centre of the AI push can turn vast infrastructure spending into returns.
Alphabet lost more than $500 billion in market value on Thursday after disclosing that AI-generated summaries placed at the top of search results were affecting its core search advertising revenue. The company expects to spend up to $205 billion this year on investments that are almost entirely related to AI.
Intel shares then fell 28% on Friday, wiping more than $130 billion from the company’s value. David Zinsner, Intel’s finance chief, said on Thursday that the company did not expect to generate more cash than it spent this year and forecast fourth-quarter revenue below expectations. “Looking ahead, we see the PC slowdown continuing at least through the first half of next year.”
Amazon also told investors that it had spent more cash than it was making, with spending rising six-fold over three months. The company has committed $220 billion this year to investments including AI data centres, network equipment and servers.
Reddit shares fell 29% after the company reported daily user figures below expectations and said Google’s expanding AI-led search was hurting referral traffic. Meta and Lam Research also disappointed investors with their quarterly reports.
Technology stocks fell for a second consecutive day as concern mounted over the hundreds of billions of dollars being put into artificial intelligence. Meta, Alphabet, Oracle, Amazon and Microsoft have committed $800 billion between them for spending in 2026.
“Investors have turned ruthless, punishing any signs of disappointment in third quarter earnings,” said Kathleen Brookes, research director at trading firm XTB. “The AI trade has had a good run in recent years, but now investors want payback, and companies like Alphabet and Intel are in the crosshairs.”
Chris Low, an investment manager at FHN Financial, said companies were “showing some pretty significant growing pains as they aggressively pursue the AI build-out.” Nick Giorgi, chief equity strategist at Alpine Macro, described the situation as having “a lot of balls in the air”. “The market's just not giving the benefit of the doubt to companies that are spending a ton of money on building this all out.”
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