S&P 500 Falls 1.8% as Concerns Grow Over Returns on AI Investments
Key Facts
The S&P 500 ended Friday, October 30, down 1.8%, in a sell-off fueled by investor concerns that heavy spending on artificial intelligence will not generate profits and productivity gains sufficient to justify its cost, according to The Associated Press. Pressure on chipmakers and technology companies outweighed the performance of a number of stocks outside the sector, as losses spread across major U.S. indexes. Investors are asking whether “hundreds of billions of dollars will produce enough profits and productivity to make the investment worthwhile,” the agency said. Portfolio manager Joe Tigay described the shift in AI trading as a move “from a phase of hopes and dreams to a phase of: Show us the results.” Despite the decline, the U.S. market remained 3.1% below its record high.
Intel was the biggest decliner among prominent stocks, falling 28.6% in its largest one-day drop since 1974, after its fourth-quarter earnings forecast came in below analysts’ estimates, according to The Associated Press. The chief executive pointed to continued pressure on the personal computer industry. Nvidia, meanwhile, was the largest single drag on the S&P 500, with its shares down 4.2%, outweighing Intel’s decline. Technology stocks fell sharply, while major energy companies rose after quarterly results topped analysts’ expectations. Exxon Mobil gained 2.2% and Chevron rose 1.8%, illustrating the divergence between sectors during the session.
Amazon’s results added to the debate over companies’ ability to fund AI expansion while maintaining cash flow, despite continued growth in its cloud business. Sales at Amazon Web Services rose 39.3% to 46 billion dollars in the quarter ended September 30, 2026. Chief Executive Andy Jassy told investors he still expects capital spending of 220 billion dollars this year, with a large share directed toward building data centers for artificial intelligence. The figures came as investors increasingly question the returns that large investments in infrastructure will generate. The comparison between rapid cloud-services growth and the scale of capital spending puts companies’ ability to turn expansion into profits and productivity to a direct test.
For the week ended October 30, the S&P 500 lost about 0.6%, while the Nasdaq fell 2% and the Dow Jones 0.9%, according to The Associated Press. The Nasdaq was the weakest performer of the three indexes, consistent with the heavy weighting of technology and chip stocks in the sell-off. In the bond market, the yield on the 10-year U.S. Treasury fell to 4.93% at Friday’s close, from 4.98% on Thursday evening, after topping 5.30% earlier in the month. Investors moved into safer assets as the yield declined, the agency reported. Markets are also tracking spending on artificial intelligence and U.S. economic indicators that could help assess the strength of economic activity.
Attention turns after the session to the U.S. October jobs report, scheduled for release on Friday, November 6, at 8:30 a.m. Eastern Time, according to the Bureau of Labor Statistics’ calendar. The following week’s agenda also includes earnings season: more than 100 companies listed in the S&P 500 were scheduled to report results, according to Reuters via Marketscreener. Apple and chipmakers AMD and Qualcomm are among the companies markets are watching, Reuters reported. Jobs figures and earnings take on added importance as investors weigh the resilience of economic activity against the cost of expanding in artificial intelligence. The jobs report will be among the next indicators investors monitor as they assess the strength of the economy.