"The sell-off has begun": The Nasdaq 100 fell nearly 2% amid renewed doubts about the AI rally
Photo: X / NYSE
The global rally in tech stocks stalled after disappointing financial results from two industry giants—Alphabet and Microsoft—reignited market doubts about whether billions in AI investments would yield sufficient returns. At the opening of U.S. trading, major stock indices fell: the S&P 500 lost 0.5%—heading for its first decline in the last four days—while the tech-heavy Nasdaq Composite plunged 1.66% right off the bat, and the Dow Jones fell 0.4%. The narrower Nasdaq 100 index, which tracks the performance of the 100 largest companies traded on that exchange, plummeted by nearly 2%—at its low, it fell by 1.8%.
Shares of Alphabet, Google’s parent company, fell 13%—and are on track for their worst day ever —after the company’s revenue and earnings for the most recent reporting period came in below forecasts. In addition, the company reported negative free cash flow for the second consecutive quarter—at the end of the third quarter, it stood at a negative $9.07 billion.
Shares of non-cloud providers also slipped into the red: Microsoft’s capital expenditures fell short of expectations. This suggests that the company’s infrastructure partners may need more time to bring data center capacity online, CNBC explains. Against this backdrop, CoreWeave shares fell by more than 3%, Nebius by 5%, and Iren by nearly 7%.
Shares of software developers also fell: weak quarterly reports from ServiceNow and Fortinet heightened concerns about the industry's future amid the widespread adoption of AI, according to Bloomberg.
What People Are Saying in the Market
“The selection process has begun: tech companies are now being evaluated solely based on their AI spending, and this will inevitably divide them into winners and losers. “We’re now starting to see who is spending on AI rationally and who isn’t,” said Richard Rail of Questar Capital Partners, commenting on the latest reports from big tech companies (as quoted by Bloomberg).
"Having fallen short of forecasts on virtually all key metrics—except for cloud revenue—Google is entering the AI 'Hunger Games' from a position of weakness," wrote Michael O’Rourke, chief market strategist at JonesTrading Institutional Services, in a research note. “Disappointing results in advertising—a business in which Google and Meta Platforms dominate worldwide—clearly illustrate the main risk that investors fear,” he explained.
“The second quarter [of 2026] marked the first time [Alphabet’s] free cash flow was negative, and now [based on third-quarter results] history has repeated itself,” noted Steve Grasso, CEO of Grasso Global (as quoted by CNBC). “We’re seeing a pattern: the market values cash on hand, not investments,” he emphasized, noting that “Apple, not Google, is now seen as the ‘safe’ asset.”
This article was AI-translated and verified by a human editor
