Nasdaq-100 On Track For First Monthly Loss Since July — Here's What's Weighing On Tech Stocks

Disappointing Big Tech earnings, rising AI financing costs and semiconductor weakness have weighed on the index despite continued optimism about AI demand.

• The Nasdaq-100 index declined 3.31% in October, after gains of 4.2% in August and 3.2% in September.
• Memory and storage stocks have come under pressure after reports that China's CXMT had made progress on a new chip architecture.
• Nine of the S&P 500’s 11 sectors are on track for monthly gains, with only technology and communication services lagging.

The Nasdaq-100 is on track for its first monthly decline in three months, as a broad selloff in technology heavyweights dragged the index lower throughout October.

The index was down 3.31% through Thursday's close, after gains of 4.2% in August and 3.2% in September and a 6.61% loss in July. Despite October's weakness, the Nasdaq-100 remained up more than 16% year to date.

Selling pressure continued Friday, with Nasdaq-100 futures falling as much as 2%. Intel (INTC) plunged about 25% in premarket trading following a weak outlook, while Amazon (AMZN), SanDisk (SNDK), Lumentum (LITE) and Advanced Micro Devices (AMD) added to the losses, declining between 4% and 9%.

What’s Driving October’s Tech Selloff?

1. Earnings: Alphabet (GOOG, GOOGL) erased over $700 billion in market value as earnings missed estimates, with slowing Search growth and negative free cash flow adding to concerns. Meta (META) also declined as higher AI spending plans and proposed share issuance worried investors.

ServiceNow (NOW) stock plunged despite beating revenue estimates, as adjusted earnings missed expectations and fourth-quarter contracted revenue growth outlook slowed. Fortinet (FTNT) also tumbled despite strong earnings, as product growth decelerated and the company lowered its annual services revenue forecast.

Amazon and Intel added pressure as AMZN stock fell over 7% on Friday amid concerns about cash outflows and higher capital spending, while INTC shares plunged about 25% after weak guidance and warnings of cash burn.

Meanwhile, Direxion's Jake Behan told Reuters, “At this point, the market isn't just asking how fast you can grow. It's asking what you have to spend to get there”.

2. AI Spending And Financing Costs Draw Scrutiny

Big Tech's AI spending plans have also raised concerns about returns on investment and borrowing costs. Alphabet expects capital expenditures of $195 billion to $205 billion in 2026, while Amazon plans to spend approximately $220 billion. 

Meta forecasts $135 billion to $145 billion, including finance lease payments, while Microsoft (MSFT) expects around $170 billion in capital spending this calendar year. Microsoft also priced a $25 billion bond offering Thursday, with proceeds potentially funding capital expenditures and other corporate needs.

Vanda Research strategist Jai Malhi described investors as “capex vigilantes,” noting to Bloomberg that higher funding costs were pressuring tech companies whose revenue growth fell short of expectations.

3. China Competition Weighs On Memory Stocks: Memory and storage stocks have come under pressure after reports that China's ChangXin Memory Technologies (CXMT) had made progress on a new chip architecture designed to increase memory density.

The developments raised concerns about increased competition for memory-chip manufacturers. Micron Technology (MU), SanDis, Western Digital (WDC), SK Hynix Inc. (SKHY) and Seagate Technology (STX) fell around 11-25% in October.

4. Investors Rotate Beyond Tech: The selloff was largely concentrated in technology stocks as more than 400 S&P 500 companies advanced Thursday even as the Nasdaq-100 dropped 1.4%, according to Bloomberg. 

Nine of the S&P 500's 11 sectors were on track for monthly gains, excluding technology and communication services. UBS maintained its constructive outlook on AI. However, the firm recommended managing concentrated technology exposure through diversification.

Raymond James strategist Matt Orton told CNBC on Friday that the AI selloff was not a “moment of reckoning,” noting that fundamentals remained strong, particularly for companies benefiting from AI capital spending, despite crowded investor positioning.

See Also: US Stock Futures Fall As AMZN, INTC Earnings Trigger Tech Sell-Off: NVDA, RDDT, RIVN, SFM In Focus

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