US stocks today: Dow Jones crashes 500 pts, Nasdaq over 2.5% as AI cash burn fears spark tech selloff

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ETMarkets.com

All three major US stock indexes ended lower, with technology stocks bearing the brunt of the selling pressure. The weakness followed earnings reports from Intel and Amazon released late Thursday, which failed to satisfy investor expectations and revived concerns about the financial burden of building AI infrastructure.

S&P 500 lost 139.30 points, or 1.80%, to end at 7,580.21 points, while the Nasdaq Composite lost 747.73 points, or 2.84%, to 25,440.68. The Dow Jones Industrial Average fell 571.98 points, or 1.09%, to 51,770.58.

In market capitalization, the Dow Jones lost $312.22 billion, the S&P 500 shed $1.23 trillion, and the Nasdaq Composite dropped $1.20 trillion.

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AI investment returns back in focus

The selloff reflected growing investor scrutiny of whether massive investments in AI will translate into meaningful returns, particularly as companies face increasingly high expectations.

Chip stocks came under heavy selling pressure, dragging the Philadelphia SE Semiconductor Index towards a monthly loss.

"It's fair to say that this week, not just today, has been very much about the future of AI and what that's going to look like, whether there will be a positive return on investment and if so, how quickly," Oliver Pursche, senior vice president at Wealthspire Advisors in New York.

"Companies that are performing and meeting the very lofty expectations that have been set are doing well," Pursche added. "Those that are falling short and seem to be missing the mark or not executing as expected are getting punished."

Earnings season offers some support

Despite the broader market weakness, corporate earnings have remained relatively resilient. According to LSEG data cited by Reuters, 299 S&P 500 companies had reported third quarter results, with 82% beating consensus estimates. Analysts expect S&P 500 earnings growth of 31.6% year on year.

Exxon Mobil and Chevron also beat quarterly profit expectations, benefiting from stronger margins amid energy supply disruptions.

Elsewhere, Starbucks shares slipped after the company forecast an annual revenue decline following its planned divestiture of its Chinese business.

Cryptocurrency related stocks Coinbase, Strategy and Robinhood also fell following reports that hackers stole $6.3 billion from Binance, the world's largest cryptocurrency exchange.

The S&P 500 and Nasdaq ended October with monthly losses, while the Dow managed to retain a gain. All three indexes finished the week lower, according to Reuters.