Alphabet lost $500bn, Intel 28.6%, Nasdaq 2.86%: the AI bill came due

Wall Street closed October with its worst technology session since June. The Nasdaq Composite fell 747.73 points, 2.86%, to 25,437.00 on Friday, its largest one-day percentage drop since 5 June and 7.8% below the record close of 6 October. The Dow lost 1.09%, the S&P 500 1.82%.

A selloff about payback, not misses

Intel, which reported heavy cash burn, plunged 28.6%. Amazon slipped after guiding below estimates. Chips followed: Nvidia fell 4.2%, AMD 10.9%, and the Philadelphia semiconductor index 7.2%, leaving it more than 15% lower on the month. Dell lost 10.8%, HP 9.6%. And yet 299 S&P 500 companies have reported, 82% of them ahead of consensus, with LSEG expecting third-quarter earnings growth of 31.6% year on year. The repricing was not about whether profits arrived. It was about what the spending behind them returns, which Oliver Pursche of Wealthspire Advisors framed as "whether there will be a positive return on investment and if so, how quickly".

Google's AI is eating Google's ads

The clearest case came a day earlier. Alphabet lost just over $500bn in market value on Thursday, its shares down more than 12% to a six-month low and its capitalisation from $3.97tn to $3.46tn. Revenue grew 25% to $127.6bn and still fell short, mainly in advertising. Chief business officer Philipp Schindler said AI mode, which answers questions conversationally, was eating into the money Google makes from ads beside traditional results, while insisting he felt "very good about our trajectory". Kim Scott, who formerly led Google's advertising business, told the BBC's Today programme the company would "rather eat its own lunch than allow someone else to eat their lunch".

The number that makes cash burn literal

Amazon makes the phrase concrete: sales up 11% to $201bn, free cash flow of negative $42bn, and capital spending six times higher than three months earlier. Andy Jassy said the outlay "would be more convenient" spread over 25 years, then conceded: "That's not the world we live in." Microsoft, which spent about $5bn less on AI-dedicated investment and is cutting thousands of jobs, fell less than 1%.

What Friday's number does not say

Friday's 2.86% is one session. The S&P 500 tech sector's monthly loss is its largest since March 2025, and communication services had their worst month since April 2022; those are separate claims. AI was not the only reason for risk-off either: Coinbase, Strategy and Robinhood fell 7.2% to 10.6% after the $6.3bn Binance hack, and bitcoin touched a six-week low. Forrester's Tracy Woo called the Alphabet result a test of "funding massive AI investments while maintaining the strength of established businesses". Earnings beats will not buy patience indefinitely.