The Nasdaq recorded its worst October since 2025 as investors question if heavy AI spending will deliver quick profits. With US midterm elections approaching on November 3 and volatility rising, the market is now waiting for Nvidia’s results on November 17 to gauge the sector's next move.
The technology sector is under significant stress as the rally driven by artificial intelligence (AI) faces a reality check. In October 2026, the Nasdaq Composite index fell by over 5%, marking its worst monthly performance since early 2025. This downturn highlights a growing concern among investors regarding the massive amounts of money tech giants are spending to build AI capabilities.
Companies like Alphabet, Amazon, Meta, and Microsoft have seen their cash flow positions change drastically over the past year. Where these firms once enjoyed a cash surplus, heavy investment in data centers and AI hardware has pushed them into a multi-billion dollar deficit for the third quarter of 2026. Investors are now asking a tough question: when will these expensive bets on AI infrastructure actually turn into meaningful revenue?
The operational strain is already visible in the market. Intel, for example, saw its share price drop by nearly 30% in a single trading session after it released a weak revenue forecast and flagged manufacturing struggles. This has made investors wary of any technology company that cannot show a clear path to profit from its AI spending.
Adding to the pressure are broader economic and political factors. Borrowing costs remain high, making the debt-funded expansion of AI projects much more expensive than it was in previous years. The market is also bracing for the US midterm elections scheduled for November 3, 2026. Uncertainty regarding which party will control Congress and how that might shift fiscal policy is keeping traders on edge.
On the geopolitical front, tensions involving Iran remain a factor to watch. If the conflict worsens, it could push crude oil prices higher, which would negatively impact global inflation and supply chains.
Looking ahead, the next major test for the market is Nvidia’s third-quarter financial results, expected around November 17, 2026. As a key supplier of the chips powering the AI boom, Nvidia’s performance is seen as a signal for the entire semiconductor industry. If the company confirms that demand remains strong despite the current market caution, it could help stabilize sentiment. If not, the current volatility may persist as investors continue to rotate their portfolios toward more stable assets.