Wall Street slides as AI cash burn worries spark tech selloff

All three major US stock indexes slumped, with the Nasdaq sliding 3.4%. The tech-heavy index has dropped more than 8% from its all-time closing high reached on October 6. The tech rout was sparked by disappointing quarterly results from Intel and Amazon released late on Thursday. The companies' shares slumped 2.1% and 30.9%, respectively. Chip stocks veered sharply lower, with Nvidia down 5.3% and AMD sliding 12.1%.

The broader chips index shed 8.7% and was headed for a monthly loss. Server makers Dell and HP lost 12.5% and 10.8%, respectively. Amazon and Intel were set to wipe out nearly $200 billion in combined market value if losses hold, setting up the Nasdaq-100 to erase over $1 trillion on Friday. "It's fair to say that this week, not just today, has been very much about the future of AI and what that's going to look like, whether there will be a positive return on investment and if so, how quickly," said Oliver Pursche, senior vice president at Wealthspire Advisors in New York.

"Companies that are performing and meeting the very lofty expectations that have been set are doing well," Pursche added. "Those that are falling short and seem to be missing the mark or not executing as expected are getting punished." The selloff put all three indexes on course to close lower on the week. The S&P 500 and the Nasdaq are on track to log monthly losses, while the Dow appears set to end October with a gain.

The Dow Jones Industrial Average fell 566.81 points, or 1.08%, to 51,778.86, the S&P 500 lost 160.54 points, or 2.08%, to 7,559.85 and the Nasdaq Composite lost 881.35 points, or 3.37%, to 25,303.37. The S&P 500 tech sector was on track for its largest monthly percentage loss since March 2025, and communication services looked to be headed for its biggest monthly drop since April 2022. Third-quarter earnings season has passed the halfway mark, with 299 companies in the S&P 500 having reported.

Of those, 82% have beaten consensus expectations, according to LSEG data. Analysts now expect third-quarter S&P 500 earnings growth of 31.6%, year-on-year, per LSEG. Oil supermajors Exxon Mobil and Chevron both beat quarterly profit expectations, benefiting from soaring profit margins as a result of energy supply disruptions arising from the US-Israeli war with Iran and Russia's war in Ukraine. The stocks gained 1.7% and 1.4%, respectively.

Starbucks slid 1.4% after the coffee chain forecast an annual revenue decline due to its divestiture of its Chinese business. Cryptocurrency-related firms Coinbase, Strategy , and Robinhood fell between 8.8% and 13.6% in the wake of reports that hackers stole $6.3 billion from Binance, the world's biggest cryptocurrency exchange. Declining issues outnumbered advancers by a 1.8-to-1 ratio on the New York Stock Exchange.

There were 147 new highs and 298 new lows on the NYSE. On the Nasdaq, 1,144 stocks rose and 3,559 fell as declining issues outnumbered advancers by a 3.11-to-1 ratio. The S&P 500 posted 43 new 52-week highs and five new lows while the Nasdaq Composite recorded 62 new highs and 290 new lows. (Reporting by Stephen Culp in New York; Additional reporting by Shashwat Chauhan, Tharuniyaa Lakshmi and Purvi Agarwal in Bengaluru; Editing by Matthew Lewis)