It was a brutal end to the week for many of the companies at the heart of the artificial intelligence (AI) value chain, as investors became increasingly concerned about the scale of spending required to sustain the industry’s rapid growth and, more importantly, when that spending will begin to generate meaningful returns. The Nasdaq fell by more than -3.0% on Friday alone, capping off a difficult October in which the latest round of earnings releases did little to reassure investors that the sector's ambitious capital expenditure plans are translating into commensurate earnings growth. The Federal Reserve (Fed) leaving interest rates unchanged also failed to provide any meaningful support.
Several of the market’s largest technology companies came under heavy pressure. Alphabet suffered one of its weakest trading days on record, declining more than -12.0% after signalling a further acceleration in spending relative to earlier in the year. Amazon's results also disappointed investors, while semiconductor leaders such as NVIDIA and Broadcom faced renewed selling pressure as concerns about the sustainability of AI related investment intensified. Elsewhere, Intel endured an especially difficult week, falling almost -30.0% after lowering expectations for future earnings. While growth stocks struggled, the picture was notably different elsewhere in the market. More value-orientated areas continued their recent run of outperformance, recording a fourth consecutive week of relative gains versus growth. As a result, the broader S&P 500 proved considerably more resilient than the technology sector, declining a more modest -0.6% (both figures in US dollar terms) despite the sharp sell-off across many of the market's recent AI-driven winners.
Outside of the US, equity market performance was generally more resilient, helped in part by lower exposure to the areas of the market that have been most affected by the recent reassessment of AI-related spending. The MSCI Europe ex UK Index advanced +2.0% (in euro terms), with investors increasingly looking beyond the US technology sector and towards areas of the market offering more attractive valuations and less demanding earnings expectations. The FTSE 100 delivered a more modest gain of +0.4%, supported by its defensive characteristics and relatively limited exposure to large-cap technology companies. In Asia, performance was more mixed. The Nikkei 225 gained 1.0% (in yen terms), despite significant weakness amongst several of Japan's AI and semiconductor-related businesses. Strength in domestically focused sectors, alongside more defensive areas of the market, helped offset much of that pressure. By contrast, Chinese equities continued to lose momentum in what has been a challenging year for investors. The Shanghai Composite declined -2.5% (in renminbi terms), with semiconductor stocks among the weakest performers as concerns around the outlook for earnings and technology investment weighed on sentiment. The move extended the recent period of underperformance and highlighted the difficulties Chinese equities have faced in establishing sustained positive momentum during 2026.
Macro Data
| Country | Event | Period | Actual | Forecast | Previous |
|---|---|---|---|---|---|
| UK | Bank of England Money & Credit Report | October | - | - | - |
| US | Durable Goods Orders MoM | September | 1.80% | 1.70% | -0.10% |
| Federal Reserve Policy Meeting | October | - | - | - | |
| New Home Sales Annually Adjusted Units | September | 0.676m | 0.650m | 0.684m | |
| Revised Gross Domestic Product QoQ | Q3'26 | 3.40% | 3.20% | 2.20% | |
| Europe | Flash Gross Domestic Product QoQ | Q3'26 | 0.40% | 0.20% | 0.60% |
| European Central Bank Monetary Policy Meeting | October | - | - | - | |
| Japan | Retail Sales YoY | September | 2.30% | 3.30% | 2.70% |
| Unemployment Rate | September | 2.40% | 2.50% | 2.50% | |
| China | N/A | - | - | - | - |
| Source: Refinitiv Workspace | |||||