The Nasdaq Composite dropped sharply on Friday, while the Dow Jones Industrial Average held up comparatively better, as traders rotated away from popular artificial intelligence-related stocks into more defensive areas of the market.
The tech-heavy Nasdaq fell 2.2%, the blue-chip Dow lost 155 points, or 0.3%, and the S&P 500 slid 1.2%.
Amazon.com (AMZN) shares declined 5% after the company reported third-quarter earnings and revenue that missed Wall Street expectations.
The company also reported negative free cash flow of $42.4 billion and maintained its 2026 capital expenditure forecast of $220 billion.
Intel (INTC) shares fell 26% after issuing a weak outlook for the current quarter, reflecting slowing growth in the personal computer market.
Revenue in its client computing and physical AI business unit declined 5% year over year to $8.1 billion.
Despite beating expectations for its fiscal first-quarter results, SanDisk shares dropped 9%.
The data storage company announced an eight-for-one stock forward split.
Broader chipmakers also came under pressure.
AMD fell 8%, while companies such as Nvidia and Broadcom each declined about 3%.
As investors moved from tech stocks into defensive sectors, areas such as consumer staples and healthcare posted gains.
Procter & Gamble, Walmart and Coca-Cola shares each rose about 2%, supporting Dow futures.
Johnson & Johnson and Merck, also Dow components, gained nearly 2% each.
"Rotation in the stock market may continue today as concerns about AI monetization prospects intensify again, but the major indexes will reflect downward pressure from tech stocks," JPMorgan traders said in a recent report.
The decline comes as investors reassess AI-related investments.
During Thursday's regular trading session, Google parent Alphabet shares fell 12% after the company's third-quarter earnings and revenue missed expectations and it recorded negative free cash flow of $9.07 billion.
The company's slide dragged the Nasdaq Composite down 1.4% during that day's regular session, while the S&P 500 fell 0.3%.
Friday is the last trading day of October.
The AI sector had a volatile month as investors closely watched companies' infrastructure spending.
Major cloud providers Google and Microsoft both did not raise their capital expenditure forecasts.
Meanwhile, cloud companies behind the infrastructure needed for AI data centers — emerging cloud providers — are being scrutinized by investors over debt levels.
CoreWeave, whose bond yields rose sharply, became a prime example of this concern; its shares plunged 30% in October.
Nebius is set to fall 27% this month.
The Roundhill Memory ETF (DRAM), which includes AI storage stocks Micron and Seagate Technology, has fallen 14% in October, while the iShares AI Innovation and Tech Active ETF (BAI) dropped 10%.
As traders prepare to close out the month, the Nasdaq Composite is expected to fall 2.5%.
The S&P 500 is on track to rise 0.9%, while the Dow is on pace to gain 2.8%.
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