Nasdaq Posts Worst Month Since March 2025 as AI Spending Doubts Hit Tech Stocks

The Nasdaq Composite closed out its worst month since March 2025 on Friday, October 30, as a week of disappointing earnings from large technology companies revived investor doubts about how much money the artificial intelligence buildout is consuming and when it will pay off.

The Nasdaq fell 2.86% on Friday to 25,437.00, its biggest one-day percentage drop since June, according to Reuters. The index ended October more than 5% lower and 7.8% below its record close of October 6. The S&P 500 fell 1.82% to 7,580.07 and the Dow Jones Industrial Average lost 1.09% to 51,770.31 on Friday, while the Dow finished October higher.

The selling was led by the companies at the center of the AI spending boom. Intel’s 29% plunge on Friday, its worst day since 1974, followed a fourth-quarter forecast that fell short of analyst expectations. Reddit fell 29% after weaker user numbers and a revenue forecast below estimates. Alphabet fell more than 12% on Thursday, erasing more than half a trillion dollars of market value, after disclosing that the AI summaries at the top of its search results were hurting its core advertising revenue. Its 1.4% fall on Friday capped the stock’s worst month on record, according to CNN.

Spending totals put the rally on trial

Amazon’s results showed free cash flow turning to an outflow of $42.4 billion over the 12 months through September, from an inflow of $14.8 billion a year earlier. The company said the swing came mainly from a $94.8 billion increase in purchases of property and equipment, which primarily reflects investments in artificial intelligence, and it still expects about $220 billion in cash capital spending for 2026.

Microsoft, Meta, Amazon and Alphabet together have accounted for more than a third of all capital spending by current S&P 500 companies over the past 12 months, Capital Economics said, adding that their share seems likely to rise further. “Now that the combined capital spending boom at the hyperscalers is becoming partly dependent on external financing, investors are becoming more nervous about the sums they are collectively investing and how they are doing it,” said John Higgins, a markets economist at Capital Economics.

“Investors are voting all of a sudden and all together on who will monetize the investment and who won’t,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.

Not every large stock fell

The Nasdaq 100 fell 3.46% on Friday to 28,384.85, closing 9.1% below its October 6 record, just short of a 10% correction. Microsoft, Apple and Tesla rose for the month, and the equal-weight S&P 500 fund gained 4.95%, a sign that the damage was concentrated in technology and communication services while other parts of the market held up.

Some investors described the pullback as a normal retreat after a long climb rather than a sign of a deeper problem. “I don’t think it’s a particularly troublesome leverage issue that we’re dealing with. We’ve had such a huge move up in the whole complex,” said Sahak Manuelian, managing director for global equities sales and trading at Wedbush Securities. “When you’ve had the parabolic-like moves, it makes for a very nasty downdraft.”

Oil prices rose 2% on Friday, and financial stocks fell, with Goldman Sachs down 4% and Jefferies down 6%, according to Reuters. One question facing investors now is whether a new month brings a fresh start after a day in which many headed for safer assets, including government bonds, rather than waiting to see what happens over the weekend.

Reporting based on coverage by Reuters and CNN.