The Stock Market Is Doing Something for Only the 3rd Time in 28 Years, and History Says It's Clear What Comes Next for Stocks
Key PointsThe artificial intelligence (AI) infrastructure build-out has launched the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite to new heights.
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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