A sharp wave of selling in technology stocks dealt a sobering blow to Wall Street, pushing the Nasdaq 100 down more than 4 percent and into a technical correction — defined as a 10 percent decline from a recent peak. The S&P 500 also fell, losing about 2.5 percent during the session, according to Bloomberg.
Specific losses and notable movers
Tech-heavy indexes have seen particularly large October declines: their market capitalization fell by more than $1.2 trillion during the month. Among individual names, Intel dropped 31 percent after issuing weaker guidance, marking one of the company’s largest single-day falls in over four decades. Amazon shares slid 2.3 percent amid reports of rising investment expenditures.
Market sentiment was further dampened by a Financial Times report that Blackstone believes Anthropic may not immediately receive investment-grade debt ratings following a potential IPO.
Why investors are nervous: AI spending vs. core business performance
Part of the sell-off reflects concern that the core businesses of major U.S. technology firms — advertising, consumer and retail operations that are funding roughly $750 billion of planned AI investments this year — are showing signs of slowing. In some cases, the new AI technologies that companies are banking on are beginning to cannibalize their traditional revenue streams.
That dynamic raises questions about the durability of demand for AI and whether the large sums being poured into technology will deliver the expected returns. Analysts warn that if core operations weaken, the prospect of the long-promised large payoffs becomes more remote, and profitability itself may come under doubt.
Analyst views: from optimism to a need for proof
An analyst at Equity Armor Investments says the market has moved out of a phase of “hopes and dreams” for AI and into a proof stage: order books alone are no longer sufficient, and investors want to see who can convert demand into actual profits and cash flow. UBS analysts add that while AI demand remains strong, the risk is growing that the market may struggle to absorb the massive capital spending mid-cycle, so investors should consider building more resilient portfolios beyond the technology sector.
A Miller Tabak analyst warned that if major indexes fall further, the sector rotation that has supported U.S. equities could end, potentially pushing investors into cash rather than rotating into other industries.
Implications and investor response
The recent moves suggest investors will increasingly differentiate between companies that can translate large AI investments into sustainable profits and those for which returns are uncertain. In the near term, expect heightened volatility in tech stocks; over the longer term, the shifts could prompt portfolio rebalancing away from concentrated technology exposure.
This article was prepared with the assistance of an AI tool; the final content was edited and verified by our journalist.
Tags: Amazon, UBS, artificial intelligence, U.S. stock market, correction, Intel, technology sector, Nasdaq, S&P 500
