AI-assisted research analysis by FutureKnowledge. Sources checked 31 October 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
The Nasdaq Composite fell 2.86% on Friday, 30 October, ending October down roughly 5%, its worst month since March 2025, as doubts over AI spending hit big technology stocks.
What happened on Wall Street
US stocks had their worst day since early June on the last trading day of October. According to AP closing figures published by KRMG, the S&P 500 fell 140.32 points, or 1.8%, to 7,580.07; the Dow Jones Industrial Average lost 572.25 points, or 1.1%, to 51,770.31; and the Nasdaq Composite dropped 747.73 points, or 2.9%, to 25,437.00. The Russell 2000 of smaller companies fell 1.7%. All three major indices posted weekly losses.
For the month, Yahoo Finance reported the Nasdaq down about 5% and the S&P 500 down about 1.2%, while the Dow rose about 1.5%. BigGo Finance put the Nasdaq’s October fall at 5.3% and said it was the index’s third straight weekly loss. Technology and communication services were the only S&P 500 sectors to fall during the month, Yahoo Finance said.
Why tech stocks sold off
AI spending without matching cash flow
The common thread was investor doubt about whether heavy AI spending will pay off. This week’s results from the largest cloud companies showed rising capital spending: Alphabet’s shares slid on its capex plans despite fast cloud growth, and Amazon’s capex hit $77.3 billion in Q3. Yahoo Finance reported that Amazon’s free cash flow over 12 months was negative by more than $42 billion, which it linked mainly to AI infrastructure. MarketScreener said worries over hyperscaler spending, together with Intel’s results, drove the sell-off in mega-cap chipmakers; the Nasdaq-100 fell 3.46% on the day.
Intel’s worst day since 1974
Intel shares closed down 28.58%, their worst day since 1974, after its Q4 outlook of $15 billion to $16 billion missed forecasts, according to StockTitan. StockTitan, citing CNN, said a closely watched chip index fell 7.2%. Nvidia fell 4.2%, and BigGo reported that Apple, down 1.2%, overtook Nvidia as the world’s most valuable listed company with a market value of about $5.03 trillion against Nvidia’s $4.93 trillion.
Other pressure points
Several consumer internet stocks also fell after results. StockTitan reported Roblox down 18.05% after a weak bookings forecast and Coursera down 25.54%, and Yahoo Finance said Reddit dropped about 24%. Crypto-linked stocks were hit by the $6.3 billion Binance hack, with bitcoin near $76,600, Yahoo Finance said. Energy shares such as ExxonMobil and Chevron were among the few gainers.
Rates and economic data
Data released the same morning showed labour costs still rising. The US Bureau of Labor Statistics said compensation costs for civilian workers rose 0.8% in the three months to September, with wages and salaries up 3.1% over 12 months. Yahoo Finance reported the 10-year Treasury yield at 4.929% and said two Fed presidents had argued rates need to rise to curb inflation, after the Fed held rates in a 10-2 vote on 28 October with two officials backing a hike. Higher yields tend to weigh most on richly valued growth stocks.
How it affects India
Indian shares rose on Friday, partly because they closed before the US sell-off took hold, and Indian IT stocks gained. Business Standard reported the Sensex up 308.49 points at 74,459.53 and the Nifty 50 up 116.35 points at 23,053.10, with Nifty IT the top sectoral gainer as investors moved away from global AI plays. Midcap and smallcap indices fell. The US slide on Friday night is the first thing Indian traders will weigh when markets reopen on Monday, 2 November. Indian IT services firms are less directly tied to AI chip spending than US chipmakers, but they depend on US corporate technology budgets.
Who is more or less exposed
- More exposed: chipmakers and AI infrastructure suppliers whose valuations assume continued spending growth; companies relying on new debt or equity to fund AI build-outs; crypto-linked equities.
- Less exposed: sectors that gained in October, such as energy, and value-oriented stocks in the Dow, which rose for the month.
- Mixed: IT services firms, which may benefit if clients shift from building AI capacity to using it, but which are sensitive to US tech budgets.
Scenarios to watch
The table below sets out conditional scenarios, not predictions.
| If… | Then a plausible outcome is… |
|---|---|
| November results show AI revenue catching up with capex | Some of October’s tech losses could reverse |
| The October jobs report on 6 November shows hot wage growth | Expectations of a December rate hike could firm, adding pressure on growth stocks |
| Funding conditions tighten for AI build-outs | Chip and data-centre suppliers could see further de-rating |
| US-Iran tensions push oil higher | Inflation worries could rise, while energy shares might keep outperforming |
Truist strategist Keith Lerner, quoted by Yahoo Finance, saw the sell-off as a possible reset with 2% to 8% further downside for tech, while arguing the longer-term uptrend remains intact. That is one strategist’s view, not a forecast endorsed here.
What to watch next
- The US October jobs report on Friday, 6 November.
- Apple’s results on 2 November and Nvidia’s later in the season.
- Comments from Fed officials on a possible December hike.
- How Asian and Indian markets open on Monday, 2 November.
Bottom line
October ended with the Nasdaq’s worst month since March 2025, driven by a sharp shift in how investors view AI spending: from a growth story to a cash-flow question. With rates high and a possible Fed hike in view, the next round of data and results will test whether the sell-off was a reset or the start of a longer adjustment.
Method note
This analysis compared AP closing data (via KRMG), Yahoo Finance, StockTitan, MarketScreener, BigGo Finance and Business Standard, plus the US Bureau of Labor Statistics release on employment costs. Monthly Nasdaq declines differ slightly between sources (about 5% versus 5.3%); daily closing figures are taken from AP.