Wall Street Suffers Worst Day Since June as AI Spending Fears Hammer Tech Stocks

Photo: Dietmar Rabich, CC BY-SA 4.0, via Wikimedia Commons. File photo of the New York Stock Exchange, not a photo of Friday's trading session.

Wall Street closed out a brutal week on Friday, with a deepening sell-off in technology stocks handing the market its worst day since June and raising fresh questions about whether the trillions being poured into artificial intelligence will pay off soon enough.

The S&P 500 tumbled 1.8 percent, or 140.32 points, to 7,580.07, its worst single day since June, and closed out a third straight losing week. The technology-heavy Nasdaq composite sank 2.9 percent, or 747.73 points, to 25,437.00 — its biggest one-day percentage fall since June 5 — while the Dow Jones Industrial Average dropped 572.25 points, or 1.1 percent, to 51,770.31.

The Nasdaq has now fallen 7.8 percent from its record closing high reached on October 6, and the broader market remains only 3.1 percent below its all-time high — a pullback that has nonetheless erased staggering amounts of wealth in a matter of weeks.

Intel leads the rout

Intel led the way lower on Friday, plunging 28.6 percent for its worst drop since 1974. The chipmaker reported a stronger profit for the summer quarter than analysts expected, but its forecast for profit in the final three months of the year fell short of expectations, as chief executive Lip-Bu Tan said the personal-computer industry continues to feel pressure.

The pain spread across the chip sector. Nvidia fell 4.2 percent and AMD dropped 10.9 percent, while the broader semiconductor index declined 7.2 percent, taking its monthly losses to more than 15 percent. Server makers Dell and HP also came under pressure, falling 10.8 percent and 9.6 percent respectively.

Amazon fell 1.4 percent after reporting a weaker profit for the summer than analysts expected. Potentially more concerning for investors was Amazon's disclosure that it had burned through $42.4 billion of cash over the prior 12 months on a free-cash-flow measure, after spending $94.8 billion on property and equipment, primarily for artificial-intelligence infrastructure.

Why investors are suddenly doubting the AI boom

The sell-off reflects a market-wide reassessment of the AI infrastructure boom. Companies have committed hundreds of billions of dollars this year to data centres, chips and power, and investors are now asking how quickly that spending turns into profit.

"It's fair to say that this week, not just today, has been very much about the future of artificial intelligence and what that's going to look like, whether there will be a positive return on investment and if so, how quickly," Oliver Pursche, senior vice president at Wealthspire Advisors in New York, told Reuters.

The technology sector of the S&P 500 recorded its biggest monthly percentage decline since March 2025, while the communication services sector registered its steepest monthly fall since April 2022. The weakness also spilled overseas: South Korea's Kospi dropped 3.5 percent, while Hong Kong's Hang Seng climbed 1.5 percent.

In the bond market, Treasury yields eased as investors bought government bonds in search of something safer. The yield on the 10-year Treasury fell to 4.93 percent from 4.98 percent late Thursday, and from more than 5.30 percent earlier in the month. Brent crude oil rose 2.4 percent to $113.43 a barrel.

Not everything fell

Not every corner of the market suffered. ExxonMobil climbed 2.2 percent and Chevron added 1.8 percent after the oil giants reported stronger profit for the summer than analysts expected, helped by soaring refining margins.

Cryptocurrency-related stocks fell sharply, however, after reports that hackers stole about $6.3 billion from Binance, the world's biggest cryptocurrency exchange. Coinbase, Strategy and Robinhood fell between 7.2 and 10.6 percent.

Despite the market weakness, the broader earnings season remained positive. Of the 299 S&P 500 companies that had reported third-quarter results, 82 percent had beaten consensus estimates, according to LSEG data cited by Reuters, and analysts expected third-quarter earnings growth of 31.6 percent year on year.

What it means days before the midterms

The timing adds a political edge. The market slide comes days before the November 3 midterm elections, and worries about AI have already become a concern for voters across political parties. President Donald Trump has historically used the stock market's performance as a measure of his own success.

For now, the question hanging over Wall Street is whether Friday's rout was a healthy reset after a long run higher — or the start of a deeper reckoning with the price of the AI boom. The answer will depend on whether the next wave of earnings shows the spending starting to pay.

Sources: The Associated Press; Reuters.