Intel Plunges 28% as AI Spending Fears Drag Wall Street to Worst Day Since June

Wall Street’s love affair with artificial intelligence hit its roughest patch in months on Friday, October 30, 2026. A sell-off in technology shares that began a day earlier deepened sharply, as investors punished companies whose AI spending is racing ahead of the revenue it produces. The S&P 500 fell 1.8%, its worst day since June, and closed out a third straight losing week, according to the Associated Press. The tech-heavy Nasdaq composite dropped about 2.9% to 25,437, and the Dow Jones Industrial Average lost 572 points, or 1.1%.

The biggest casualty was Intel. The chipmaker’s shares collapsed by roughly 28% to 29%, depending on the measure used by different outlets, wiping out more than $130 billion in market value, the BBC reported. CNBC called it the stock’s worst day since the 1970s.

Why Intel fell so hard

Intel’s third-quarter report combined two things investors dislike most right now: weaker demand and heavier spending. The company forecast fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings of 25 cents a share. Analysts surveyed by LSEG had expected about $17.1 billion in revenue and 43 cents a share, according to CNBC. Intel cited continued softness in the PC market, which is being squeezed by soaring memory and component costs, along with a plant shutdown in Israel.

At the same time, management signaled it would keep spending. Chief financial officer David Zinsner said the company did not expect to bring in more cash than it spent this year. “Looking ahead, we see the PC slowdown continuing at least through the first half of next year,” he said, according to the BBC. He added that equipment investment, already ramped up in the third quarter, would be “even more significant” in the months ahead.

The fallout reaches beyond private shareholders. The U.S. government took a roughly 10% stake in Intel more than a year ago, and CNBC estimated that stake lost about $12 billion in value on Friday. Nvidia, which also holds a large position, saw its Intel holding drop by about $6 billion.

Alphabet, Amazon and the cost of the AI build-out

Friday’s rout built on Thursday’s shock from Alphabet. Google’s parent suffered its worst day on record, falling more than 12% and erasing over $500 billion in market value, after it said the AI-generated summaries now shown at the top of search results were affecting its core search advertising revenue. Alphabet also said it expects to invest up to $205 billion this year, almost all of it tied to AI. Its shares slipped another 1.4% on Friday.

Amazon fell 1.4% as well after missing earnings expectations and reporting negative free cash flow for a second consecutive quarter. The company has committed about $220 billion this year to data centres, network equipment and servers. According to the BBC, Meta, Alphabet, Oracle, Amazon and Microsoft together plan to spend roughly $800 billion on AI in 2026, putting the industry’s total close to $1 trillion.

The pain spread to companies that depend on search traffic. Reddit plunged 29% after weaker-than-expected daily user numbers and a warning that Google’s AI-driven search is hurting referrals. Roblox fell 18% as its daily active users declined.

“Investors have turned ruthless”

Analysts framed the sell-off as a shift in what markets are willing to pay for. “Investors have turned ruthless, punishing any signs of disappointment in [third quarter] earnings,” Kathleen Brookes, research director at XTB, told the BBC. “The AI trade has had a good run in recent years, but now investors want payback.”

Chris Low of FHN Financial told Reuters that the largest players were “showing some pretty significant growing pains as they aggressively pursue the AI build-out,” and that markets were reading those signs as a slowdown for the whole sector.

Other forces added to the pressure. Oil prices climbed about 2% on renewed supply fears after Iran said four tankers hit mines in the Strait of Hormuz, with Brent crude finishing above $117 a barrel, AFP reported. Bitcoin also fell after the exchange Binance acknowledged a major hack. Energy was a rare bright spot: ExxonMobil rose 2.2% after its third-quarter profit more than doubled to $15.4 billion.

Perspective: a rough month, not a crash

For all the drama, the broader market remains close to record territory. The AP noted the S&P 500 closed only about 3.1% below its all-time high. The Nasdaq ended October with its worst monthly slide since March 2025, yet it is still up about 7.8% over the past year, according to the BBC. Brookes also pointed out that November has historically been a strong month for stocks.

What has changed is the burden of proof. For two years, announcing bigger AI budgets tended to lift a company’s shares. This week, the same announcements, paired with soft guidance or shrinking cash flow, sent them sharply lower. If that pattern holds, the market will reward companies that can show paying customers and margins from AI, not just capital spending plans.

What it means for businesses

• Expect tougher ROI questions. If investors are demanding payback from the largest tech firms, boards and finance teams will ask the same of internal AI projects. Tie AI initiatives to measurable revenue or cost savings.
• Watch hardware costs. Rising memory and component prices are hitting PCs. Companies planning device refreshes should budget for higher costs and possible delays.
• Search traffic is shifting. Alphabet’s and Reddit’s warnings show AI summaries are changing how people find information. Businesses that rely on organic search should diversify toward email, direct audiences and partnerships.
• Energy remains a wild card. Higher oil prices tied to the Strait of Hormuz add to inflation risk, which could affect borrowing costs and consumer spending.

The next test comes as more companies report earnings in November. Investors will be watching whether AI spending starts to show up in revenue, or whether this week marks the moment the AI trade lost its momentum.

Sources: Associated Press, BBC News, CNBC, AFP. Market figures reflect closing levels on October 30, 2026.

---

Turn every customer call into revenue. MAJ.COM Voice AI answers your phones 24/7, qualifies leads and books appointments, so your business never misses an opportunity. Try MAJ.COM Voice AI today.

Edited by Palawan @QUE.COM
Website: https://QUE.COM Intelligence
Sponsored by: https://MAJ.COM AI Autonomous