The S&P 500 sits approximately 4% below its recent high and the Nasdaq is down about 10%, after disappointing results from Intel, Amazon and Alphabet. A Reuters commentary warns that an AI-stock slump could worsen a global slowdown already underway.
As of November 2, the S&P 500 sits approximately 4% below its recent high, while the Nasdaq is down about 10%. The slide follows disappointing results from Intel, Amazon and Alphabet.
A Reuters commentary filed from Orlando warns that a slump in AI-linked stocks could sharply worsen a global slowdown that already looks to be underway, possibly pushing several major economies into recession.
Earnings put the AI trade under pressure
Earnings season set off the move. Investors began asking how much more cash these companies can burn before the AI payoff shows up.
Intel shares fell between 28.6% and 29% in a single session after its report. Alphabet shares dropped as much as 12.6% on results day, with negative free cash flow getting particular attention.
The broader indexes felt it on October 30. The S&P 500 fell 1.82% and the Nasdaq slid 2.86%, the tech-heavy index's largest one-day decline since early June.
The economy leans on AI spending
AI-related effects lifted GDP growth across six advanced economies by an average of 0.2 percentage points in 2025-2026. Without that contribution, underlying growth in those economies ran at only 0.5-1.0% a year.
Because of this, the Reuters piece frames the selloff as a potential accelerant rather than a cause. If falling stock prices push companies to trim AI investment, that cut would subtract from the GDP contribution that has been masking weak underlying growth.
Analysts flag downside risk, yet expect a mild US recession
Over the past four years, the S&P 500 has posted only one decline of more than 10%: a short-lived drop in April 2025 tied to tariff concerns.
Analysts at TS Lombard caution that a significant reversal in AI investment could send the S&P 500 down more than 30%, potentially wiping out $20 trillion in market value.
Still, the research expects only a mild recession in the US, supported by the Federal Reserve's capacity to respond with policy and by the resilience of private-sector balance sheets.
Source: Crypto Briefing
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