The Nasdaq Just Flashed a Signal Investors Can't Afford to Ignore. History Says the Stock Market Will Do This Next.
The Nasdaq Composite fell more than 5% in October as Wall Street grew more concerned about how much money hyperscalers are spending on AI.
The Nasdaq Composite (^IXIC -2.86%) experienced its worst monthly drop in October since 2025's tariff-induced turbulence, plummeting 5.3%. The decline was fueled by worries about the artificial intelligence boom, specifically the financial results of Alphabet and Amazon. The tech sector's capital expenditure (capex) spending for AI infrastructure surpassed $400 billion in 2025, and is projected to reach $900 billion by 2026.
JPMorgan Chase expects AI capex spending to exceed $5.5 trillion by 2030. Despite this, JPMorgan market strategist Dubravko Lakos-Bujas thinks Wall Street's pessimism is misplaced. The Nasdaq Composite has historically rebounded strongly after monthly declines of at least 5%. Excluding October, the index has had 14 such declines since 2015, yet it has typically recovered 24% over the following year.
Amazon and Alphabet reported negative free cash flow in Q2, triggering panic among investors. However, these reports are merely a snapshot in a larger picture. The AI boom remains a transformative opportunity for patient investors, and the Invesco QQQ Trust (QQQ -3.47%), which tracks the Nasdaq-100, could be a solid investment.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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