NEW YORK — Wall Street closed October with a sharp selloff on Friday as the technology giants’ earnings turned investors against the industry’s enormous spending on artificial intelligence. The Nasdaq Composite fell 2.86 percent — 747.73 points — to 25,437.00, its largest one-day drop since June 5, in figures reported by Reuters. The S&P 500 lost 1.82 percent to 7,580.07, and the Dow Jones Industrial Average fell 1.09 percent to 51,770.31. The Nasdaq-100 fell 3.46 percent, and its companies lost more than $1 trillion in market value in the single session. It was the second consecutive day of selling.
The Worst Month Since March 2025
Friday’s losses capped a punishing month. The Nasdaq ended October down about 5 percent, its worst monthly decline since March 2025, and the S&P 500 technology sector recorded its largest monthly fall since the same month. The Nasdaq now sits 7.8 percent below the all-time closing high it set on October 6. The Dow, which carries far less technology, gained for the month — the rout was concentrated in the stocks that had carried the market’s AI boom.
Alphabet’s $500 Billion Day
The week’s biggest blow landed on Thursday, when shares in Alphabet, Google’s parent company, fell more than 12 percent — its worst day since the company listed in 2004 — wiping out an estimated $500 billion in market value. Fox Business called it the second-largest one-day loss of market value in United States market history, behind only Nvidia’s fall in January 2025. Alphabet fell a further 1.4 percent on Friday.
The results behind the fall were these: revenue rose 25 percent to $127.6 billion but missed expectations, and net income fell 25 percent to $26.2 billion, far below the $37.3 billion analysts expected. Revenue from search, the company’s largest business, rose 12 percent to $63.4 billion, slower than the 15 percent expected and down from 17 percent growth the quarter before. Chief business officer Philipp Schindler acknowledged that queries through Google’s AI Mode were replacing traditional searches and earning less advertising revenue. Capital spending reached $51.3 billion in the quarter and free cash flow was negative $9.1 billion; Alphabet expects to spend up to $205 billion this year, almost entirely on AI. “The first quarter that AI is starting to seriously hurt their search business,” Pivotal Research chief executive Jeffrey Wlodarczak said, in comments reported by Fortune.
Intel Plunges; Amazon’s Cash Drains
On Friday the selling hit Intel hardest. The chipmaker’s shares fell 28.6 percent — its worst day since 1974, according to CNN — after it forecast fourth-quarter revenue of $15 billion to $16 billion, below the roughly $17.1 billion analysts expected, and warned it would burn cash this year. Intel cited a weak personal-computer market — revenue from its client computing business fell 5 percent to $8.1 billion — and manufacturing bottlenecks, even as its data-center and AI revenue jumped 78 percent to $7.3 billion. The wider chip sector fell with it: AMD lost 10.9 percent, Nvidia 4.2 percent, and the Philadelphia Semiconductor Index 7.2 percent.
Amazon reported third-quarter revenue of $201.9 billion, up 12 percent, and net income of $20.7 billion — both below estimates — and free cash flow of negative $42.4 billion over the past twelve months, against a positive $14.8 billion a year earlier. The company held to its plan to spend about $220 billion on capital investments this year and signalled more next year, even as its cloud division, Amazon Web Services, grew 39 percent to $46 billion, its fastest growth in nearly five years. Its shares closed down 1.4 percent on Friday after a steeper fall in after-hours trading on Thursday.
Reddit Feels The Same Squeeze
Reddit fell 29 percent on Friday despite revenue rising 51 percent to $895 million, ahead of estimates. Chief executive Steve Huffman warned that Google’s AI summaries are cutting the traffic search engines send the site — by more than a million referrals a week through October — and the company’s fourth-quarter revenue guidance of $1 billion to $1.03 billion missed the $1.05 billion expected.
The Question Hanging Over $1 Trillion
Underneath the week’s results sits the scale of the spending itself. Amazon, Alphabet, Microsoft and Meta spent more than $200 billion in the third quarter alone. The year’s AI investment by the largest companies is estimated at about $735 billion, and five companies’ combined commitments for 2026 have been put at $800 billion. J.P. Morgan expects global AI capital spending to reach $900 billion in 2026 and $5.5 trillion by 2030; Morgan Stanley expects spending on AI infrastructure to pass $1 trillion next year. Several of the companies have borrowed in the bond market to fund the buildout, which adds borrowing costs to the question investors are now asking: when does the spending start returning cash?
The earnings season underneath the selloff has not been weak. Of the 299 S&P 500 companies that had reported third-quarter results, 82 percent beat expectations, according to LSEG data cited by Reuters. The next test comes when United States markets reopen on Monday.
The Selloff — In Short
Friday: Nasdaq −2.86% to 25,437.00, S&P 500 −1.82% to 7,580.07, Dow −1.09% to 51,770.31; Nasdaq-100 companies lost more than $1 trillion in the session. October was the Nasdaq’s worst month since March 2025. On Thursday Alphabet fell more than 12% — an estimated $500 billion, its worst day since listing in 2004 — after disclosing that AI Mode searches earn less than the traditional search advertising they are replacing. Intel fell 28.6% on Friday, Amazon reported negative $42.4 billion in twelve-month free cash flow against a $220 billion spending plan, and Reddit fell 29% on the same AI-summaries squeeze. The largest companies’ AI spending is estimated at about $735 billion this year.
Sources: Reuters; CNN; Fox Business; Fortune; the New York Post; Morningstar; company results statements of October 29–30, 2026.
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