Wall Street Tech Stocks Slide as Investors Worry Over AI Spending

Technology stocks on Wall Street faced a sharp sell-off this week as investors worried that massive spending on artificial intelligence infrastructure will not bring profits fast enough. Major companies posted growth in cloud and AI units, but markets focused on rising costs for data centres and advanced chips. This pushed the Nasdaq 100 Index down by 6.7% in October, marking its worst monthly drop since March 2025. Alphabet shares plunged 13% on Thursday after reporting weak search sales and a second straight quarter of negative free cash flow, having spent over $50 billion on infrastructure. Amazon shares fell 5.6% over two sessions after reporting higher negative free cash flow due to capital costs and slow e-commerce growth. Meta and chipmaker Intel also dropped, with Intel shares tumbling nearly 29% on Friday after a weak profit forecast. The downturn also hit global markets, as China's STAR 50 Index fell 24% over the past month. Across major US indices, the S&P 500 lost 43.61 points, the Dow Jones fell 444.85 points, and the Nasdaq Composite dropped 518.34 points.

Context

Heavy spending on artificial intelligence requires companies to build expensive data centres before seeing steady financial returns. When capital investments outpace incoming cash, markets often reevaluate stock values and demand proof of long-term profit growth.