AI spending fears deepen Wall Street selloff as Big Tech earnings disappoint

Wall Street's AI optimism faltered as Big Tech earnings disappointed, triggering a selloff that pushed the Nasdaq 100 Index down 6.7% in October, its worst month since March 2025. Investors focused on rising data center costs eroding free cash flow. Alphabet shares plunged 13% on negative free cash flow, while Amazon fell 5.6% on higher spending and slow e-commerce growth. Meta's credit outlook was downgraded to negative. Software stocks also suffered, with ServiceNow dropping 31% on weak forecasts. Three of four hyperscalers posted cash flow deficits, with Amazon's negative free cash flow near $35 billion. Microsoft was the exception with positive cash flow of $18.6 billion.