If your savings sit in an S&P 500 fund, October cost you about 0.9%. If they sit in a fund heavy in AI stocks, it cost you far more: the Nasdaq had its worst month since March 2025, Alphabet lost 18.3% and Intel 45.3%. The AI selloff was real, but it was narrow, so what you lost depends on what your fund holds.
| If you own a fund that tracks | October |
|---|---|
| The Dow | Up 1.7% |
| The S&P 500 | Down 0.9% |
| The Nasdaq | Down more than 5% |
| Japan’s Nikkei 225 | Down 5.2% |
| Korea’s KOSPI | Down 16.2% |
Why did AI stocks fall in October?
Demand for AI didn’t dry up. What changed is that investors began asking how long all the spending will take to pay off.
Alphabet’s results showed why. Google Cloud’s sales more than doubled, up 103% from a year earlier. But during the quarter the company spent $9.1B more on data centers and equipment than its business brought in as cash. It also missed forecasts for both sales and profit, said it would spend even more next year, and its stock fell about 12% in the next day’s trading.
Disappointing results from Intel and Amazon followed, and the selling spread across AI stocks. Companies that don’t depend on AI spending mostly held up: Visa and Apple both finished the month higher.
Why some markets fell so much harder
Korea shows what happens when a market is built around AI hardware. Two memory-chip makers, Samsung Electronics and SK hynix, made up about 52% of the KOSPI’s value in June. When both slid in mid-October, the index lost more than 14% in a single week, reports say. Emerging-markets funds usually include Korea, so this reaches further than Seoul.
A broad US fund is less spread out than its name suggests, too. The ten largest companies made up about 38% of the S&P 500 in mid-2026, near last year’s record of 40.7%, and most of their share prices depend on the same AI hopes. That explains much of the S&P 500’s small dip.
Is the AI bubble bursting?
I don’t think anyone can say yet, and I don’t think it’s a simple yes or no. The spending is real, and so are the sales it’s bringing in. What’s in doubt is the timing of the payoff, and a market can be right about the technology and wrong about the timing at once.
Intel is a separate story. Its worst day came from its own weak results, so I don’t read it as a verdict on AI as a whole. What I watch instead is whether big tech’s spending keeps growing faster than its sales, and whether any of them says it will spend less next quarter.
| Fall | Nasdaq loss | Main reason |
|---|---|---|
| October 2026 | More than 5% in a month | Doubts about AI payback |
| 2022 | 33% over the year | Rising interest rates |
| Dot-com, 2000-2002 | 78% over 30 months | Sky-high prices for companies with little or no profit |
Next to those, October looks small. What would make me take it more seriously is profit: if sales keep falling short of the spending for several more quarters, I’d stop treating this as a wobble and start treating it as the start of something bigger.
I may be too calm about this. If big tech cuts its AI budgets, or sales growth slows, the selling could spread from a handful of companies to the whole index, and with nearly four of every ten dollars in an S&P 500 fund going to ten companies, it wouldn’t take much.
What I did, and what to check in your fund
When Intel’s drop made the news, my first question was whether this was the whole market or a few companies. I own a Nasdaq-100 fund, but it’s the smaller part of my account; most of it tracks a US dividend index. I opened my brokerage app, saw the mix had shifted slightly toward the dividend side, and left it, because I only rebalance when the mix moves more than five percentage points.
On days like this I check the mix and don’t trade. I didn’t sell in the tariff shock of April 2025 either, when my account was down a little over 10 percent from its peak. My monthly contribution goes in as usual, but I don’t buy extra just because prices fell.
If you own index funds, one thing is worth doing this weekend: look up your fund’s ten largest holdings and add up their weights. If you hold a target-date fund, its fact sheet lists the funds inside it, and you can check the biggest one. If most of your money turns out to be in the same few AI companies, a month like October will cost you more than the headline numbers suggest.
Will the Nasdaq end November higher than it ended October?
How each language voted
Resolves: Nasdaq Composite close on November 30, 2026 · Reader opinions, not investment advice.
Sources
- Investing.com, Nasdaq slides over 5% for worst month since March 2025 as AI trade suffers (October 31, 2026)
- Alphabet, third quarter 2026 results (Form 8-K, exhibit 99.1)
- CNBC, Alphabet sinks 10% as it holds 2026 capex unchanged (October 28, 2026)
- Daum (News1), Samsung and SK hynix share of the KOSPI (June 2026)
- Supple, KOSPI falls 14% in a week as Samsung and SK hynix slide (October 2026)