October 28, 2026 — A sharp sell-off in US technology stocks has renewed concerns about the valuations of artificial intelligence (AI) companies and the growing cost of AI infrastructure. The Nasdaq Composite fell 2.6% on October 22 before rebounding on October 27. These moves do not, on their own, prove that a broad stock market crash has occurred.
What Happened on October 22?
During the October 22 market sell-off, the Nasdaq Composite dropped 2.60%, its biggest one-day percentage decline since June 5. The S&P 500 fell 1.21%, while the Dow Jones Industrial Average edged up 0.02%. The mixed performance showed that technology shares were under greater pressure than the market as a whole.
Semiconductor shares were among the hardest hit. The Philadelphia SE Semiconductor Index fell 6.7% on October 22, its steepest daily decline since June 23. Intel, AMD, Sandisk and Marvell each lost more than 8%, reflecting a sharp reassessment of expectations for AI-related chipmakers.
Meta Platforms shares fell about 7% on October 22 even though the company reported third-quarter revenue of $64.60 billion, up 26% from a year earlier. According to Meta’s third-quarter 2026 earnings release, quarterly free cash flow was negative $2.12 billion, while the company projected 2026 capital expenditures of $135 billion to $145 billion, including finance-lease principal payments. The figures show why investors are looking beyond revenue growth to the cash cost of expanding AI infrastructure.
AI Spending Concerns and the October 27 Rebound
Large technology companies are committing substantial sums to AI chips, data centers, cloud computing and related infrastructure. For example, TechBonafide previously reported on CoreWeave’s $6 billion AI data-center project in Pennsylvania. Investors are questioning how quickly such investments can generate enough revenue and cash flow to justify their upfront costs.
US stocks recovered some ground on October 27. According to Reuters’ October 27 market report, the Nasdaq Composite gained 1.18%, the S&P 500 rose 0.60%, and the Dow Jones Industrial Average advanced 0.03%. AI and semiconductor shares helped drive the rebound, although concerns about spending and valuations have not disappeared.
What Investors are Watching Next?
Attention is now turning to third-quarter earnings from major technology companies. As of the morning of October 28, Microsoft and Alphabet were expected to report later that day, while Amazon was scheduled to report on October 29. Investors will be examining cloud revenue, AI demand, capital-spending guidance and cash flow to assess whether expensive AI projects are producing financial returns.
The Federal Reserve’s October 27–28 policy meeting is another major event. An interest-rate decision is scheduled for October 28. Higher borrowing costs can pressure businesses that rely on debt or outside financing, including some smaller AI companies. Investors will also watch the Fed’s outlook for future interest-rate changes.
Recent selling has renewed questions about whether some AI-related shares are priced too high relative to their expected profits. Similar valuation concerns have appeared in other markets: TechBonafide recently covered China’s AI-stock sell-off, where technology shares faced substantial losses. The Chinese decline has its own causes and should not be treated as evidence that US stocks will follow the same path.
A prolonged decline in technology valuations could make fundraising harder for companies that rely heavily on investors or borrowing. Cash-rich technology platforms may have more flexibility to finance AI projects internally, while smaller businesses may face tighter conditions. TechBonafide’s report on Switch’s proposed US stock market listing illustrates how AI data-center operators may look to public markets for expansion capital, although the outcome of that proposed offering is not yet known.
Is a Stock Market Crash Underway?
A steep one-day fall in the Nasdaq or semiconductor shares does not automatically amount to a US stock market crash. On October 22, the Dow posted a small gain even as technology shares fell sharply, and major indexes recovered some ground on October 27. The evidence points to concentrated pressure on AI-related stocks, not a confirmed market-wide collapse.
The next test for Wall Street will be whether technology earnings and company guidance demonstrate enough AI-driven growth to support the scale of infrastructure spending. Stronger profits and cash flow could ease investor concerns, while weaker forecasts or higher financing costs could renew selling. Market conditions remain uncertain, and a short-term rebound does not guarantee that volatility is over.
