The Nasdaq Composite plunged sharply on Friday; trading capital flowed out of AI-related stocks and into defensive market sectors, while the Dow Jones blue-chip index held up relatively well.
The Nasdaq Index, with higher weightings in technology stocks, fell 2.2%; the blue-chip Dow Jones Industrial Average dropped 155 points, or 0.3%; and the S&P 500 declined 1.2%.
Amazon's stock fell 5% after the company released its Q3 2026 earnings report, disclosing quarterly revenue results. The company also reported negative free cash flow of $42.4 billion over the past twelve months and maintained its capital expenditure guidance of $220 billion for 2026 (consistent with the data provided in Amazon's earnings report).
Meanwhile, Intel's stock plunged 26%. The company issued a weak earnings forecast for the quarter, citing slowing growth in the personal computer market; revenue from its client computing and physical AI business segments declined 5% year-over-year to $8.1 billion.
Despite exceeding market expectations for its first fiscal quarter, SanDisk's stock fell 9%; the data storage company announced an 8-for-1 forward stock split.
The chip sector as a whole faced broad pressure: AMD shares plunged 10%; NVIDIA and Broadcom fell 3% and 4%, respectively.
As investors rebalance their portfolios and exit the technology sector, defensive sectors such as consumer staples and healthcare have seen gains. Procter & Gamble, Walmart, and Coca-Cola each rose approximately 2%, providing support to Dow Jones futures; Johnson & Johnson and Merck, also components of the Dow, advanced nearly 2%.
JPMorgan's trading team stated in Friday's research report: "The market is once again concerned about the monetization potential of AI businesses; today's sector rotation trend may continue, and major broad-market indices will reflect the downward pressure from declining tech stocks."
Amid this downturn, investors are reassessing the AI trading landscape. On Thursday, Alphabet, Google’s parent company, posted its worst single-day performance in history: its third-quarter revenue and profits fell short of expectations, and free cash flow turned negative at $9.07 billion. Dragged down by Google’s steep decline, the Nasdaq closed more than 1% lower in regular trading.
Friday was the last trading day of October. The AI sector experienced volatility in October, with investors closely monitoring capital expenditures by various companies on AI infrastructure. Major hyperscale cloud providers Alphabet and Microsoft did not raise their capital expenditure guidance.
Meanwhile, a new generation of cloud service providers (Neoclouds—cloud vendors specializing in computing infrastructure for AI data centers)—are facing scrutiny from investors over their credit risk. CoreWeave’s bond yields have surged sharply, reflecting this market concern: its stock plunged over 36% in October. NBIS has fallen 32% this month.
The DRAM index, composed of AI storage stocks such as Micron and Seagate, fell 14% in October; the AI computing power index declined 10% over the same period.
By the end of the month, the Nasdaq Composite fell nearly 5% for the month; the S&P 500 declined 0.4%; and the Dow Jones Industrial Average rose more than 2%.
Editor-in-Chief: Guo Mingyu