The Nasdaq Composite Index tumbled significantly on Friday, while the Dow Jones Industrial Average performed relatively well. The reason is that traders shifted from popular stocks related to artificial intelligence to more defensive sectors in the market.
The Nasdaq index, which has a high proportion of technology stocks, fell by 2.2%, while the Dow Jones index, which is dominated by blue-chip stocks, dropped by 155 points, a decrease of 0.3%. The S&P 500 index also declined by 1.2%.
Amazon reported third-quarter financial results that fell short of Wall Street's expectations, causing its stock price to drop by 5%. The company also reported negative free cash flow of $42.4 billion and maintained its forecast for capital expenditures of $220 billion in 2026.
Intel's stock price fell by 26% after the company released a weak performance outlook for this quarter, reflecting a slowdown in the growth of the personal computer market. Revenues from its Client Computing and Physical Artificial Intelligence business segments decreased by 5% year-on-year to $8.1 billion.
Despite its first-quarter financial results exceeding expectations, SanDisk's stock price still fell by 9%. The data storage company announced that it will conduct a 8-for-1 stock forward split.
Wider chip manufacturers are also under pressure. AMD fell by 8%, while companies such as NVIDIA and Broadcom each fell by about 3%.
As investors shifted from tech stocks to defensive sectors, there was an upward movement in areas such as consumer goods and healthcare. The stock prices of Procter & Gamble ( Procter & Gamble ), Walmart ( Walmart ), and Coca-Cola ( Coca-Cola ) all rose by about 2%, supporting the Dow Jones futures. Johnson & Johnson ( Johnson & Johnson ) and Merck ( Merck ), which are also components of the Dow Jones, also saw gains of nearly 2%.
"Due to renewed concerns about the monetization prospects of artificial intelligence, today's stock market rotation may continue, but the major indices will reflect the downward pressure on tech stocks," a JPMorgan trader stated in a recent report.
This decline comes at a time when investors are re-evaluating their investments in artificial intelligence. During regular trading on Thursday, the stock price of Google's parent company Alphabet fell by 12% due to the company's third-quarter profits and revenue not meeting expectations, as well as a negative free cash flow of $9.07 billion. The company's decline dragged down the Nasdaq Composite Index by 1.4% during that day's regular trading hours, while the S&P 500 Index fell by 0.3%.
Friday is the last trading day of October. This month, the artificial intelligence sector has been volatile, with investors closely monitoring the spending of various companies on infrastructure construction. Both large cloud service providers Google ( Alphabet ) and Microsoft have not raised their capital expenditure forecasts.
At the same time, cloud computing companies, which provide the infrastructure necessary for artificial intelligence data centers—these emerging cloud service providers—are being scrutinized by investors due to debt levels. The bond yield of CoreWeave has risen significantly, becoming a typical example of this concern; its stock price plummeted by 30% in October. Nebius is expected to fall by 27% this month.
Stocks containing AI such as Micron and Seagate Technology have seen a decline of 14% in October ( DRAM ), while iShares in the field of artificial intelligence innovation and technology have also seen a decline of 10% ( ETF ).
As traders prepare to wrap up this month, the Nasdaq Composite Index is expected to fall by 2.5%. The S&P 500 Index is expected to rise by 0.9%, while the Dow Jones Index is expected to rise by 2.8%.
Responsible Editor: Liu Mingliang
