AI-Spending Fears Spark Broad Tech Selloff as Nasdaq Posts Worst Day Since June, Semiconductors Lead Losses

U.S. stocks suffered a broad, tech-led selloff on Friday as investors pulled money out of artificial-intelligence-related names and semiconductor shares suffered a sharp rout, according to CNBC. The Nasdaq Composite logged its worst single-day performance since June, while the Dow Jones Industrial Average outperformed as traders rotated into more defensive corners of the market.

The Friday Rout

The tech-heavy Nasdaq Composite lost 2.86% to close at 25,437.00, CNBC reported, marking its steepest one-day drop since June and leaving the index roughly 8% below its recent high. The S&P 500 slid 1.82% to 7,580.07, while the Dow Jones Industrial Average fell 572.25 points, or 1.09%, to end at 51,770.31, per CNBC's reporting.

CNBC noted that selling pressure intensified in afternoon trading as investors took money off the table heading into month-end and ahead of next week's contentious midterm elections.

Semiconductors Lead the Decline

Chipmakers bore the brunt of the selloff. Seeking Alpha reported that the semiconductor-focused SOXX index dropped about 10%, with Intel and AMD leading the rout. Intel shares tanked almost 29% after the company issued a weak outlook for the current quarter, citing a slowdown in PCs, CNBC reported. Revenue in Intel's client computing and physical AI group fell 5% year over year to $8.1 billion, according to CNBC.

Other chipmakers were also hit hard on Friday, per CNBC: Advanced Micro Devices dropped close to 11%, Nvidia fell 4%, and Broadcom fell 5%. Sandisk fell 13% even though its fiscal first-quarter results beat estimates and the company announced an eight-for-one forward stock split, CNBC reported. Seeking Alpha noted that several SOXX holdings, including Micron, AMD and Marvell, retained strong Momentum Grades even as broad-based selling swept the sector.

Why the Tone Shifted: AI Spending Scrutiny

Globalt senior portfolio manager Keith Buchanan told CNBC that the market's tone has shifted from hopeful to skeptical, describing a "scrutinizing" and "discerning" market in which investors are now parsing how AI spending will be financed and who ultimately captures the economic returns. "The tone has changed a bit, and whether that changes the sustainability of the rotation is still yet to be determined," Buchanan said, according to CNBC. He added, "There are real economy risks, and the market's picking up on that."

Read as interpretation of Buchanan's comments rather than a confirmed market-wide consensus, that shift suggests investors are moving beyond simply rewarding AI-linked growth stories and are instead weighing financing costs and return timelines more closely.

Debt Concerns at AI Infrastructure Providers

Adding to the downbeat sentiment, CNBC noted a Financial Times report, citing sources, that Blackstone told investors Anthropic may not receive an investment-grade rating after its debut.

Neocloud infrastructure providers, the cloud-computing companies behind the buildout of AI datacenters, are facing investor scrutiny over their debt levels, according to CNBC. CoreWeave was singled out as the "poster child" of that worry, having seen a surge in its bond yields alongside a 37% share decline in October, CNBC reported. Nebius shares plummeted almost 35% over the same month amid similar debt-related concerns, per CNBC's reporting.

AI-focused exchange-traded funds also took a beating in October. CNBC reported that the Roundhill Memory ETF (DRAM), which includes AI memory plays Micron and Seagate Technology, fell 20% for the month, while the iShares A.I. Innovation and Tech Active ETF (BAI) dropped nearly 17%.

Hyperscaler Earnings Add to Unease

Earnings from major cloud providers this week fed into the broader anxiety over AI capital spending. Amazon shares lost more than 1% after third-quarter earnings and revenue fell short of Wall Street's expectations, CNBC reported. The company posted negative free cash flow of $42.4 billion and maintained its 2026 capital expenditures forecast of $220 billion, according to CNBC.

On Thursday, Alphabet shares posted their worst day on record after the company missed third-quarter earnings and revenue estimates and reported negative free cash flow of $9.07 billion, CNBC reported. That slide dragged the Nasdaq to a more than 1% loss in that session, per CNBC's reporting.

CNBC also noted that hyperscalers Alphabet and Microsoft did not raise their capital expenditure forecasts, a detail that appears to have reinforced investor unease over how the AI buildout will be financed during what CNBC described as a rocky month for the AI trade.

Defensive Sectors Hold Up

As money rotated out of AI-linked technology stocks, defensive sectors such as consumer staples and healthcare saw gains, CNBC reported. Walmart and Coca-Cola each rose more than 1%, helping keep the Dow's losses in check, while fellow Dow members Merck and Amgen were also higher, according to CNBC.

October by the Numbers

Traders wrapped up a losing month overall, CNBC reported. The Nasdaq dropped 5.3% in October, its steepest monthly fall since March 2025. The S&P 500 declined 0.9% for the month, while the Dow Jones Industrial Average bucked the trend, adding 1.7%, per CNBC's reporting.

Bottom Line

Friday's selloff capped a volatile month in which investors grew increasingly focused on how AI infrastructure spending is being financed and whether near-term returns justify the scale of capital outlays from chipmakers, cloud providers and neocloud infrastructure firms alike. With earnings from Amazon and Alphabet falling short of expectations, debt concerns surfacing at AI-linked infrastructure companies, and hyperscalers holding capital expenditure guidance steady rather than raising it, the market's rotation out of AI-related names reflects what Globalt's Keith Buchanan described to CNBC as a more skeptical, scrutinizing posture. Whether that shift proves durable, as Buchanan noted, remains an open question heading into a news-heavy period that includes the midterm elections.