The Nasdaq Composite Index tumbled significantly on Friday; trading funds flowed out of stocks related to artificial intelligence and shifted towards defensive sectors of the market, while the Dow Jones Blue Chips Index performed relatively well in resisting the decline.
The NASDAQ index, which has a higher weight of technology stocks, fell by 2.2%; the blue-chip Dow Jones Industrial Average dropped by 155 points, or 0.3%; the S&P 500 index declined by 1.2%.
Amazon's stock price fell by 5%. Previously, the company released its financial report for the third quarter of 2026, disclosing its quarterly revenue performance. The company also announced that it had negative free cash flow of $42.4 billion over the past twelve months and maintained its capital expenditure guidance of $220 billion for 2026 (which is consistent with the data provided in Amazon's financial report).
Meanwhile, Intel's stock price tumbled by 26%. The company provided a weak outlook for this quarter, noting that growth in the personal computer market has slowed down; its client computing and physical artificial intelligence business segments saw revenue decline by 5% year-on-year to $8.1 billion.
Despite exceeding market expectations in its first fiscal quarter, SanDisk's stock price still fell by 9%; the data storage company announced the implementation of a 8:1 reverse stock split.
The chip sector as a whole is under pressure: AMD's stock price tumbles by 10%; NVIDIA and Broadcom decline by 3% and 4% respectively.
As investors reallocate their portfolios and withdraw from the tech sector, defensive sectors such as essential consumer goods and healthcare have seen gains. Procter & Gamble, Walmart, and Coca-Cola all rose by about 2%, providing support for Dow Jones futures; Dow Jones components Johnson & Johnson and Merck also saw increases of nearly 2%.
JPMorgan's trading team stated in a research report on Friday: 'The market is once again concerned about the monetization capabilities of artificial intelligence businesses. Today's sector rotation trend may continue, and major broad-based indices will reflect the pressure brought about by the decline in tech stocks.'
Against the backdrop of this decline, investors are re-evaluating the trading situation of AI. On Thursday, Google's parent company, Alphabet, recorded its worst single-day performance in history: its third-quarter revenue and profits fell short of expectations, and its free cash flow was negative by $9.07 billion; dragged down by Google's sharp drop, the Nasdaq closed down more than 1% on a regular trading day.
Friday is the last trading day of October. On October AI, market conditions were volatile, and investors paid close attention to the AI infrastructure capital expenditures of various companies. Neither the ultra-large-scale cloud providers Alphabet nor Microsoft raised their capital expenditure forecasts.
At the same time, a new generation of cloud service providers ( Neoclouds, cloud vendors that specifically provide computing infrastructure for AI data centers) are facing scrutiny from investors regarding their credit risks. The yield on CoreWeave bonds has soared significantly, reflecting this market concern: the stock has plummeted by more than 36% since October. NBIS has seen a cumulative decline of 32% this month.
The DRAM index, which consists of storage concept stocks such as Micron and Seagate, fell by 14% in October; the AI computing power index also fell by 10% during the same period.
As of the end of the month, the Nasdaq Composite Index fell nearly 5%; the S&P 500 Index lost 0.4%; while the Dow Jones Industrial Average gained more than 2%.
Responsible Editor: Guo Mingyu
