Nasdaq 100 Falls Into Correction as AI Spending Worries Grow

Alphabet’s shares lost about $500 billion in market value after their worst one-day fall on record. The Nasdaq 100 also entered correction territory in the latest AI-related selloff. The losses reflect a harder question for investors: will the huge cost of building AI systems bring enough profit to pay it back? Big technology companies are spending billions on data centers and chips, but markets no longer treat every new spending plan as good news. ^1,7

That shift followed earnings reports showing how large the bills have become. Alphabet reported $9.1 billion in negative free cash flow for the third quarter, even as it spent $51.4 billion on capital projects. It expects to spend as much as $205 billion this year. Amazon reported $42.4 billion in negative free cash flow over the past 12 months, while Meta also spent more cash than it brought in during the quarter. Across five giants, including Microsoft and Oracle, capital spending reached $556.9 billion in the first nine months of 2026, more than the cash they generated. ^1,6

That $556.9 billion spending total is changing how investors judge even strong results. Alphabet’s search advertising growth slowed to 12%, as its AI-powered Search feature drew users but brought in less money per search. Amazon’s cloud business grew 39%, yet its shares fell after earnings. These companies are also returning less cash to shareholders: buybacks by the five firms fell 83% from a year earlier. Investors now have fewer share repurchases to support prices as they wait for AI investments to bring profits. ^1,2,6

Those profits remain the key uncertainty; they do not prove the AI boom is over. Wall Street veteran Ed Yardeni argues that limits on financing, electricity and data center construction could discourage wasteful spending and help the boom last longer. But if costs rise or returns disappoint, technology shares could face more pressure. Investors will get fresh evidence when Apple reports next week and chipmaker Nvidia reports in mid-November. ^4,7