Wall Street closes sharply lower amid AI cash burn

On Friday, US stocks slumped sharply, with the Nasdaq suffering its largest single-day percentage decline since June 5. This decline came after poor quarterly results from Intel and Amazon, which fueled concerns about AI-related companies spending heavily on the emerging technology. The tech-heavy Nasdaq fell 2.9%, dropping 7.8% from its all-time closing high on October 6.

Intel shares plunged 28.6%, while Nvidia declined 4.2% and AMD slipped 10.9%. Server makers Dell and HP also saw significant drops of 10.8% and 9.6%, respectively. Tech stocks experienced a 7.2% decline, with the broader chips index losing more than 15%. Chip stocks witnessed a sharp decline, with some companies experiencing a more than 10% decrease.

Oliver Pursche, senior vice president at Wealthspire Advisors, noted that the market's reaction to AI expectations and performance was evident, with strong performers doing well and those underperforming facing punishment. The S&P 500 and the Nasdaq both logged monthly losses, while the Dow Jones Industrial Average finished October with a gain.

The S&P 500 tech sector recorded the largest monthly percentage loss since March 2025, and communication services experienced their biggest monthly drop since April 2022. Third-quarter earnings season had reached its halfway point, with 299 S&P 500 companies reporting results. Of these, 82% had beaten consensus expectations, according to LSEG data.

Analysts now anticipate third-quarter S&P 500 earnings growth of 31.6% year-on-year. Oil supermajors Exxon Mobil and Chevron exceeded profit expectations due to rising margins from supply disruptions caused by conflicts in the Middle East. Starbucks saw a 1.8% decline after predicting an annual revenue drop due to its Chinese business divestiture.

Cryptocurrency-related firms Coinbase, Strategy, and Robinhood experienced declines between 7.2% and 10.6% following reports of a $6.3 billion theft from Binance, the world's largest cryptocurrency exchange. Declining issues outnumbered advancers on the New York Stock Exchange, with 1,196 stocks rising and 3,622 falling. The S&P 500 and Nasdaq Composite both reported new 52-week highs and lows.