Nasdaq faces $2 trillion October wipeout as AI spending doubts intensify

The tech-heavy Nasdaq 100 is on course to shed more than $2 trillion in market value this month, according to Reuters, as investors reassess whether the enormous cost of the artificial-intelligence buildout will produce returns quickly enough.

AI enthusiasm meets a tougher earnings test

The index was down more than 5.8% in October when Reuters reported the estimate. Meta Platforms, Alphabet and Amazon have each raised spending expectations as they compete to expand AI infrastructure, adding to concern that earnings growth may take time to catch up with the investment.

That pressure sharpened after recent results. Alphabet recorded its biggest one-day percentage decline after disappointing search-advertising results and a sharp increase in cash use. Meta’s plan to raise a record $97.5 billion also raised questions about dilution and whether large technology companies may increasingly turn to capital markets to fund the AI race.

Borrowing costs add another risk

The concerns are no longer limited to share prices. Reuters reported that investors are watching the credit markets for signs that higher financing costs and slower-than-expected payback from AI projects could pressure companies previously viewed as relatively insulated from macroeconomic shocks.

Microsoft and SpaceX offered a counterpoint, with results suggesting that some AI-related spending is beginning to pay off. JPMorgan Asset Management strategist John Bilton said demand for data remained strong, while cautioning that investors may have overestimated the pace of growth.

Spending forecasts keep climbing

JPMorgan expects global AI infrastructure capital expenditure to exceed $1 trillion next year, including an estimated $900 billion in 2026, and projects total AI capital expenditure of $5.5 trillion by 2030. Those are forecasts, not realized spending or guaranteed returns. The central market question is whether the investment cycle can translate into enough revenue and cash flow to justify its scale.

A separate Reuters market report said the Nasdaq fell 2.86% on October 30 after Intel and Amazon results intensified worries about AI spending, leaving the index 7.8% below its October 6 closing high. The latest losses underline how quickly expectations can shift when quarterly performance fails to match the market’s ambitions.

Sources

• Reuters: Nasdaq faces $2 trillion wipeout in October as AI spending fears deepen
• Reuters: Wall Street closes sharply lower as AI cash burn fears spark tech selloff
• Nasdaq MarketSite official facility page

Image: Nasdaq MarketSite tower in Times Square, displaying Nasdaq and Microsoft branding (file photo). Microsoft News image source.