For the week, the S&P 500 slipped 0.6% and the Nasdaq 2%, while the small-company Russell 2000 gained 1.3%. The S&P 500 was on track to erase its October gains, and about $3 trillion has come off the Nasdaq since its peak on October 6. Neil Wilson, a strategist at Saxo, called it "tech carnage." The indexes are still up for the year, with the S&P 500 ahead 10.7% and the Nasdaq 9.4%, but the Nasdaq has gone sideways since topping out near 26,000 last spring. US equity funds also saw net outflows of $6.65 billion in the week ended October 28.

Alphabet, Google's parent, had its largest one-day percentage drop on record this week, with shares falling more than 12% and its market value shrinking from about $3.97 trillion to about $3.46 trillion. Third-quarter revenue grew 25% to $127.6 billion. But the company spent $51.4 billion on capital expenditure in the quarter and posted negative free cash flow for a second straight quarter. Executives also acknowledged that Google's AI Mode earns less advertising revenue than traditional search queries.

Intel fell nearly 29% on Friday, close to its worst day since 1974. The chipmaker forecast fourth-quarter revenue of $15 billion to $16 billion, against analyst expectations of $17.07 billion, and its finance chief said it does not expect positive cash flow this year. Chief executive Lip-Bu Tan warned of pressure in the personal-computer industry even though the company reported a stronger quarterly profit. The drop pulled down other chipmakers including AMD and Qualcomm, and Nvidia, the best-known name in the AI trade, was the heaviest drag on the S&P 500. Amazon also fell after weaker profit and a cautious outlook. Over the past 12 months it spent $94.8 billion on property and equipment, mostly for AI, and burned through $42.4 billion in free cash flow.

The spending is large and growing. Meta, Alphabet and Amazon have all raised their capital expenditure forecasts, and Meta's plan for a record $97.5 billion fundraise has raised concern about diluting shareholders. Microsoft, which fell 1.9%, is reportedly planning a $25 billion bond sale, its first US investment-grade offering in more than nine years. Analysts estimate that this year's combined AI spending by Amazon, Alphabet, Meta, Oracle and Microsoft will roughly equal everything they have invested since ChatGPT launched in November 2022, and Morgan Stanley expects AI infrastructure spending to top $1 trillion next year.

Revenue has held up, though. Sales across the so-called Magnificent Seven have stayed resilient since 2022, Amazon Web Services is accelerating, and Meta reported higher-than-expected revenue growth. Microsoft and SpaceX both posted results suggesting their AI investments are starting to pay off. Joe Tigay, a portfolio manager at Equity Armor Investments, said the market has moved "out of the hopes and dreams phase of the AI trade and into the 'show me' phase." Investors are rewarding companies with enough revenue and cash flow and punishing those that spend heavily without a matching gain in sales.

Outside technology, several companies rose on stronger profits or growth. ExxonMobil gained 1.5%, Chevron 1.6%, Mondelez International 3.7% and Colgate-Palmolive 3.2%. Treasury yields fell as investors sought safety, with the 10-year at 4.95%, and Brent crude rose 2.7% to $113.79. Cryptocurrency stocks dropped after a hack of Binance involving more than $6 billion of crypto, which a US-based blockchain intelligence firm attributed to a North Korean unit. Bitcoin fell toward $77,000 from above $86,000 earlier in October, and Coinbase Global lost 12.7%.

Markets abroad were mixed. Japan's Nikkei 225 fell 2.1% after the Bank of Japan held interest rates steady, with Fujitsu down 16.2% and SoftBank, an OpenAI investor, down 6%, leaving it 48% below its June peak. Hong Kong's Hang Seng rose 1.5% and Britain's FTSE 100 gained 0.3%. In China, the CSI300 index fell 8.5% in October, its steepest monthly drop since early 2016, and Goldman Sachs estimates that AI-related stocks make up 42% of market capitalization across mainland China and Hong Kong-listed shares.