Nasdaq falls as AI and chips slide

U.S. equities sold off sharply on Oct. 30 as mounting AI infrastructure spending and Intel's weak outlook unsettled traders already facing high borrowing costs and elevated oil prices. The Nasdaq Composite fell 2.86% to 25,437, marking its weakest monthly performance since March 2025, while the Philadelphia Semiconductor Index plunged 7.20%.

The decline put the market's focus on a question that has followed the AI rally for months: how long traders will tolerate enormous capital expenditure before cloud and chip companies demonstrate a commensurate increase in profits and cash generation. Amazon and Alphabet both reported accelerating spending on data centers and computing equipment, while Intel's forecast suggested a more immediate slowdown in parts of the semiconductor supply chain.

Crypto-linked equities fell alongside technology shares, extending the connection between digital-asset markets and appetite for high-growth, high-volatility assets. Strategy dropped 7.85% to $130.51, while Coinbase fell 10.62% ahead of its quarterly results. Bitcoin was quoted near $77,206, down 0.74% on the day.

Ai spending becomes a market concern

Amazon disclosed third-quarter capital spending of $75.9 billion and raised its full-year capital expenditure expectation to roughly $220 billion. More than 65% of that spending is earmarked for AI infrastructure, according to the company.

The scale of the planned outlay overshadowed an otherwise strong quarter. Amazon reported revenue of $201.9 billion, up 12% from a year earlier, and operating income of $28.1 billion, a 61% increase. Its operating margin reached 13.9%, while Amazon Web Services generated $46 billion in revenue, up 39.3% year on year.

Amazon shares nevertheless ended about 1.4% lower. The reaction showed that higher earnings alone are no longer settling concerns over whether the biggest cloud providers can turn their AI spending into durable returns without putting further pressure on free cash flow.

Alphabet faced a similar response a day earlier. The company reported third-quarter capital expenditure of $51.4 billion and free cash flow of negative $9.07 billion, its second consecutive quarter of negative free cash flow. Alphabet reported revenue of $127.6 billion, a 25% annual increase, and net profit of $26.2 billion, down 25% from a year earlier.

Alphabet shares fell 12.64% on Oct. 29, erasing roughly $500 billion in market value based on the day's price move. The company's reported revenue was also slightly below the $128.2 billion estimate cited in the supplied market data.

The spending figures place pressure on a sector whose valuations have increasingly reflected expectations that AI demand will support years of growth. Data centers require substantial upfront investment in chips, networking equipment, electricity and cooling systems. If revenue growth remains strong but cash generation weakens, traders can become less willing to assign premium valuations to companies funding the buildout.

Intel outlook deepens semiconductor losses

Intel intensified the selling in chip stocks after forecasting fourth-quarter revenue of $15 billion to $16 billion, below the roughly $17 billion market expectation cited in the supplied data. The company forecast non-GAAP earnings per share of $0.25, compared with the $0.43 estimate, and projected a gross margin of 38%.

That margin outlook was below Intel's 44.1% gross margin in the third quarter, when it reported revenue of $16.5 billion, up 21% year on year, and non-GAAP earnings per share of $0.52.

Intel shares fell about 28%, reducing its market value to roughly $342 billion after approximately $150 billion was wiped out during the session. Other AI hardware and chip names moved lower in tandem: AMD and Arm each fell about 10%, while Taiwan Semiconductor Manufacturing Co. declined 4%.

The move reflected a reassessment of both sides of the AI trade. Cloud operators are committing record sums to infrastructure, while a major chipmaker is warning of weaker near-term revenue and margin conditions. That combination gives traders less room to assume that surging spending will translate smoothly through the hardware supply chain.

Crypto-linked stocks track the risk-off move

The equity decline reached companies tied to Bitcoin and crypto trading activity. Strategy, formerly known as MicroStrategy, reported third-quarter operating profit of $20.91 billion and net profit of $19.53 billion, figures heavily influenced by fair-value accounting gains on its Bitcoin holdings under FASB ASC 350.

Strategy said it held about 848,000 BTC at an average purchase cost of roughly $75,446 per coin and repurchased $192 million of STRC preferred stock. At a Bitcoin price of $77,206, those holdings would be valued at about $65.47 billion before debt and other corporate obligations.

Its shares traded at an implied market net asset value below 1.0 times, meaning the company's equity value was below the stated value of its Bitcoin holdings after applying the market's assessment of debt, preferred shares, operating costs and corporate structure. Such discounts can emerge when Bitcoin weakens or when traders demand less exposure to leveraged or equity-based Bitcoin proxies.

Spot Bitcoin ETFs also recorded about $111 million in net outflows during October, according to the supplied market data. The monthly figure was modest relative to the scale of the ETF market, but it aligned with a broader retreat from growth-sensitive assets.

Rates and energy add to market pressure

The Federal Reserve left interest rates unchanged at its Oct. 27-28 meeting and repeated that policymakers would wait for "an accumulation of more information" before adjusting policy. Higher-for-longer rate expectations tend to weigh most heavily on companies whose valuations depend on profits expected years ahead, including technology, AI infrastructure and crypto-linked equities.

Oil added another source of pressure. West Texas Intermediate crude settled at $102.95 a barrel, up 0.93%, amid continued concerns over Middle East tensions and shipping risks around the Strait of Hormuz. Brent crude was referenced in a $105 to $110 range.

Defensive stocks moved in the opposite direction. Eli Lilly gained 3.77%, AstraZeneca rose 7.04%, Walmart added 2.01% and Costco increased 1.94%, indicating that traders shifted toward businesses with more predictable demand and less direct exposure to AI capital-spending cycles.

The next tests for the market include Apple's earnings, the October U.S. nonfarm payrolls report, and further developments in oil markets. For crypto-linked stocks, the immediate backdrop remains tied less to company-specific headlines than to whether the technology selloff broadens or stabilizes after the sharp semiconductor decline.