More than $2 trillion in market value was set to be wiped from the tech-heavy Nasdaq 100 during October, as Big Tech earnings turned a debate about AI spending into a full-blown Nasdaq selloff over AI spending. Nasdaq 100 futures slid 2.4% on Friday morning, after Amazon fell 6.3% in premarket trading and Intel cratered more than 25% on a warning that it will burn cash this year.
Amazon and Intel alone were set to erase about $300 billion in combined market value if those losses held, adding to the index’s roughly $1.4 trillion loss so far this month. By 1:20 p.m. Eastern time, the Nasdaq Composite was down 3.1%, heading for its worst day since June, according to the Associated Press.
The question has changed.
Investors no longer doubt that companies need to spend on AI. They doubt how fast that spending pays back. Amazon reported a sharp cash outflow in the third quarter and signaled another increase in capital spending next year, on top of already elevated outlays. Intel blamed a weak market for personal computers, manufacturing bottlenecks and heavy spending to expand production. Alphabet, the day before, suffered its biggest one-day percentage drop on record after disappointing results in its core search advertising business and a sharp acceleration in cash burn. Its shares fell 12.6%, wiping out a stunning $500 billion in market value.
Why the Nasdaq selloff over AI spending spooked Wall Street
The numbers behind the selloff are stark. A Reuters analysis of LSEG data and company filings found that Microsoft, Alphabet, Amazon, Meta and Oracle generated a record $542.9 billion in operating cash flow in the first nine months of 2026, up 29% from a year earlier. But their capital spending, driven by the AI boom, doubled to $556.9 billion, exceeding the cash the five firms generated for the first time in data going back to 2011.
That left them with a combined free cash flow deficit of $14 billion, against a surplus of $143.5 billion a year earlier.
Alphabet and Meta have not repurchased a single share in 2026, after buying back $66.5 billion in the first nine months of last year. Amazon, which pays no dividend and has not bought back shares since 2022, spent $75.9 billion on capital projects in the third quarter, almost 80% more than the $42.4 billion its operations generated, and raised $48.1 billion of long-term debt in the period. Amazon said it still expects about $220 billion of capital spending this year.
Debt is now doing the heavy lifting. Meta plans a record $97.5 billion fund raise for AI, and Microsoft is reportedly planning to raise about $25 billion through its first US investment-grade bond sale in more than nine years. Morgan Stanley forecasts capital spending on AI infrastructure overall will pass a trillion dollars next year, while J.P. Morgan expects global AI spending to reach $5.5 trillion by 2030, with $900 billion spent in 2026 alone.
“The market isn’t necessarily questioning whether the AI buildout can be financed,” said Pepperstone analyst Chris Weston. “It’s increasingly questioning whether shareholders will earn an adequate return on the enormous capital being deployed.”
Who got hit hardest in the selloff
The damage spread well beyond the companies that reported. Nvidia fell about 3% in premarket trading and AMD slid 8.7%, dragging the broader semiconductor sector down with them. Disappointing results from Fortinet and ServiceNow added to the pressure, Reuters reported, as investors questioned whether massive AI spending could generate the profits and productivity gains needed to justify its cost.
Microsoft stood out from the gloom, delivering a big cash-flow beat even as it raised $25 billion through a debt sale. The Nasdaq was set to break a two-month winning streak in October, while the S&P 500 and the Dow stayed on track for gains.
What this means for AI stocks
Don’t mistake this for a verdict on AI itself. Cloud growth was strong across the board this earnings season. As Swissquote Bank senior analyst Ipek Ozkardeskaya put it, Amazon, Google, Microsoft and Meta spent more than $200 billion in the third quarter alone to deliver that growth, and that’s the part investors are now pricing in.
“I don’t think this is a broader reset. It’s more of a rotation out of an extremely popular technology trade and into safer havens,” said Art Hogan, chief market strategist at B Riley Wealth. Bonds surged toward their biggest monthly gain in nearly three years on Friday as investors sought safety, and the yen rose, in a classic risk-off move.
What happens next depends on the two names that haven’t reported yet. Apple reports next week and Nvidia, the bellwether of the whole AI trade, reports in mid-November. If either one shows that AI spending is converting into profit faster than expected, the selloff could reverse just as fast as it arrived. If they don’t, October’s $2 trillion wipeout may look like the warm-up, not the climax.
Frequently asked questions
How much value has the Nasdaq 100 lost in October 2026?
More than $2 trillion in market value was set to be wiped from the Nasdaq 100 during October, after the index fell over 5.8% in the month, according to Reuters.
Why are tech stocks falling over AI spending?
Investors worry huge AI infrastructure spending, funded increasingly with debt, will not generate returns fast enough.
Which companies drove the October Nasdaq selloff?
Amazon fell about 6.3% premarket on October 30, Intel dropped more than 25%, and Alphabet fell 12.6% a day earlier.
Are Big Tech companies still buying back shares?
Microsoft, Alphabet, Amazon, Meta and Oracle cut buybacks 83% to $13.6 billion in early 2026, and Alphabet and Meta bought back no shares at all.
Sources: Reuters, Associated Press