US technology stocks have endured a bruising week, capped by a Friday session in which the Nasdaq fell 2.9 per cent to 25,437, its lowest close since the end of July. The S&P 500 dropped 1.8 per cent and the Dow 1.1 per cent, as a sequence of disappointing results from the industry’s giants turned valuation anxiety into a full sell-off. Strategists said the tech sell-off had further to run if guidance kept disappointing.
A Week of Disappointments in the Tech Sell-Off
The slide began with Alphabet, whose shares suffered their worst session on record after underwhelming results, and deepened when Amazon missed third-quarter expectations on both revenue and profit while reporting sharply negative free cash flow. Intel’s 29 per cent collapse then dragged the entire chip complex lower. Reddit fell around 30 per cent despite strong revenue growth, after its guidance disappointed, a sign of how unforgiving the market has become. The contrast with earlier this month, when markets rallied on strong earnings, shows how quickly sentiment has flipped.
The AI spending question
Underneath the individual misses sits one big number: Amazon, Alphabet, Microsoft and Meta spent more than $200 billion on capital investment in the third quarter alone, most of it on AI data centres and chips. Investors who cheered that spending a year ago now want evidence it converts into revenue faster than it consumes cash. Amazon’s insistence that its 2026 capital budget stays near $220 billion added to the cautious tone rather than soothing it.
A global ripple
The selling did not stop at the US close. South Korea’s SK Hynix fell 8.5 per cent and Samsung Electronics 4.3 per cent as Asian markets absorbed the shock, and analysts estimate close to $3 trillion has been wiped from the Nasdaq’s value since its October 6 peak. A detailed account of the session and the stocks that drove it is available in this analysis of the tech sell-off.
It is worth remembering how quickly the mood has inverted. Only weeks ago, the same companies were being rewarded for announcing the very spending plans now held against them, and the index was setting records on the assumption that AI investment was a one-way bet. What changed was not the technology but the arithmetic investors applied to it: free cash flow turned negative at Amazon, guidance wobbled at Intel, and Alphabet’s numbers invited a second look at returns on data-centre capital. Sell-offs like this one rarely end on a single session; they end when valuations fall far enough to make the spending look affordable again, or when a set of results arrives strong enough to make the question feel naive. Next week’s earnings will test both theories.
Corrections test narratives, and the AI narrative is now being tested on cash flow rather than promise. The coming week brings Apple’s results and another round of big-tech updates; whether the selling exhausts itself or finds new fuel will depend on whether those companies can show the spending is starting to pay.
