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AI Spending Worries Spark Nasdaq Plunge
1 Nov
Summary
- Nasdaq Composite fell 5.3% in October due to AI spending concerns.
- Hyperscaler AI capex expected to nearly double from $400B to $900B.
- Nasdaq historically gains 24% after similar 5% monthly declines.
The Nasdaq Composite index saw a significant drop of 5.3% in October, marking its worst monthly performance since early 2025. This downturn was largely attributed to escalating investor concerns regarding the substantial capital expenditures by technology companies on artificial intelligence infrastructure.
Spending by the top five hyperscalers on AI infrastructure exceeded $400 billion in 2025 and is now forecast to approach $900 billion in 2026. Globally, AI capital expenditure is anticipated to surpass $5.5 trillion by 2030, according to JPMorgan Chase projections.
Historically, the Nasdaq Composite has demonstrated resilience after substantial monthly declines. Excluding the recent drop, the index has experienced 14 instances of a 5% or greater monthly fall over the past decade. Following these occurrences, the Nasdaq Composite has historically achieved an average return of 24% within the subsequent twelve months.
This pattern suggests a potential for significant market recovery. Despite short-term volatility and investor panic over quarterly reports from companies like Alphabet and Amazon, the long-term investment thesis for AI remains strong. Patient investors may find opportunities as the AI boom continues to unfold, potentially representing the most transformative technology in human history.
