Wall Street stock exchange (Credits: MarketWatch)
The Nasdaq-100 has tumbled into its third correction of 2026, falling more than 10% from its recent record as investors grow increasingly nervous about the enormous price tag of the AI boom. The latest slide followed a brutal Friday session on October 30 that saw tech stocks routed across the board.
Nasdaq-100 Third Correction 2026: What Drove the Selloff
The index fell as much as 4.5% intraday on Friday, October 30, briefly pushing it more than 10% below its October 6 record close of 31,224.47, according to reports. Bloomberg counted it as the index’s third correction of the year, following earlier corrections at the outbreak of the Iran war and in a summer semiconductor selloff. The last time US markets saw three or more 10% swings in a single year was 2022.
The catalyst was earnings. Intel cratered roughly 29% to near $65 after forecasting fourth-quarter revenue of $15-16 billion, well below expectations, in what Bloomberg called its worst stock thrashing in decades. Reddit fell about 29% to near $92 on a revenue forecast that missed estimates. Nvidia slid about 5% to near $203, leaving it roughly 12% below its 52-week high.
AI Spending Worries: Alphabet and Amazon Under the Microscope
Underneath the earnings disappointments is a deeper question: when will the hundreds of billions spent on AI data centers actually pay off? One portfolio manager put it bluntly: markets are moving “out of the hopes and dreams phase of the AI trade and into the ‘show me’ phase.”
Alphabet reported negative free cash flow of $9.1 billion in the third quarter as capital expenditures more than doubled to $51.4 billion. Amazon posted $77.3 billion in quarterly capex, with CEO Andy Jassy guiding to approximately $220 billion of capital spending in 2026; Alphabet guided to $195-205 billion. Demand for AI services remains strong — Amazon’s cloud revenue grew 39% to $46 billion — but investors are focused on how long these investments take to generate returns.
Context matters: Morgan Stanley notes most corrections occur within uptrends, with only a minority becoming bear markets. The selloff also landed ahead of the November 3 US midterm elections, after the Fed held rates in a split vote with futures pricing roughly an 83% chance of a December increase.
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Source: MarketWatch — read the full story there.
