Nasdaq Posts Worst Month Since March 2025 and S&P 500 a Third Straight Weekly Loss, Four Days Before Midterms

Since Alphabet's record one-day drop on Thursday, Oct. 29, the AI selloff has hit Intel, Amazon and the chip sector, and Friday's close, Oct. 30, put numbers on the damage for the month.

The Nasdaq Composite fell 2.9% and the S&P 500 dropped 1.8%, each its worst day since June. The Dow lost 572 points, about 1.1%. The S&P 500 closed out a third straight losing week.

The Nasdaq is down 7.8% from its record high earlier this month and finished its worst month since March 2025. The S&P 500 is down roughly 3% from its peak, and AP put it 3.1% below its all-time high.

A month of damage

Alphabet slid another 1.4% on Friday after Thursday's drop of more than 12%. That capped its worst month on record.

Intel plunged 28.6%, its worst day since 1974. The chipmaker guided fourth-quarter revenue to $15 billion to $16 billion and adjusted earnings of 25 cents a share. Analysts had projected about $17.1 billion and 43 cents.

CFO David Zinsner said, "We see the PC slowdown continuing at least through the first half of next year." CNN reported the company tied the weakness to higher memory chip costs hurting consumer demand.

Nvidia dropped 4.2%. A closely watched chip index sank 7.2%.

Amazon closed down 1.4% after trimming a steeper premarket loss of about 7%. Its free cash flow was negative $42.4 billion over the past 12 months, against negative $7.6 billion a quarter earlier. It spent $94.8 billion on property and equipment over that stretch.

Reuters calculated that more than $2 trillion in market value was on track to be wiped from the Nasdaq-100 in October, with the index down more than 5.8% for the month before the close.

The debt question

The bigger shift is in how these companies pay for the buildout. Meta has laid out plans for a record $97.5 billion fund raise, which has raised concerns about shareholder dilution. Microsoft is reportedly planning a roughly $25 billion bond sale, its first U.S. investment-grade offering in more than nine years.

Meta, Amazon and Alphabet have issued hundreds of billions of dollars in bonds over the past four years. Reuters reported that the cost to insure against default on AI-linked debt has surged, and that investors are pricing in the risk that higher financing costs and slower payoffs squeeze companies once seen as insulated.

Swissquote Bank analyst Ipek Ozkardeskaya said Alphabet, Amazon, Meta and Microsoft spent more than $200 billion in capital investment in the third quarter. Their year-to-date total is above $500 billion. "The AI race is getting very, very expensive," she said.

Morgan Stanley forecasts AI infrastructure capital spending will pass $1 trillion next year.

The case that spending will pay

The companies and some investors dispute the pessimism. Amazon CEO Andy Jassy told analysts the company will "spend meaningfully more in 2027" but has a "clear line of sight to attractive financial returns." He said he believes AWS "can grow north of 40 percent in each of 2027 and 2028" and become a trillion-dollar-revenue business within five to 10 years.

John Bilton, JPMorgan Asset Management's global head of strategic research for multi-asset solutions, said investors may have overestimated growth. "But they're not going negative in aggregate," he said. "We have an insatiable and growing demand for data."

The market is sorting spenders from payoffs rather than dumping them all. Microsoft and SpaceX posted results that showed AI spending starting to pay off.

Joe Tigay of Equity Armor Investments called it a shift: "We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase." Matt Maley of Miller Tabak said Alphabet's promised AI returns are "getting pushed even further down the road."

Beyond tech

The selloff comes with other pressures. Higher interest rates are weighing on chip and data-center stocks, and surging energy prices added to inflation worries Friday, according to Türkiye Today. Gold fell below $3,900.

The timing is awkward for Washington. AP noted that AI worries have become a concern for voters across parties, and that President Donald Trump has historically used stock market performance as a measure of his own success. Midterm elections are Tuesday, Nov. 3. The market's rise has also lifted the value of workers' 401(k) accounts.

What comes next

Apple is scheduled to report next week, and Nvidia is due in mid-November. Nvidia is the AI bellwether, and its report will test whether chip demand is still outrunning the doubts. Microsoft's bond sale will show how much debt investors are willing to absorb to fund the buildout.