AI reality check triggers $2 trillion tech stock rout

Investors worry whether hundreds of billions put into AI development will bring the profits companies have promised An estimated $2 trillion in market value was wiped from the tech-heavy Nasdaq-100 during October as investors grow increasingly skeptical that enormous spending on artificial intelligence will ever pay off.On Friday, the Nasdaq Composite dropped 2.9% in its biggest one-day fall since June. Over the whole month, the Nasdaq shed about 5.2%, its worst showing since March 2025, while the S&P 500 slipped 1.2%, and the Dow – which includes many traditional businesses – still finished October up 1.5%.Among the hardest-hit companies was Google owner Alphabet, whose shares plunged 12.6% on Thursday in its worst day on record. The slump was triggered by its earnings showing slower growth in search advertising, its core business. While search advertising revenue still grew 12%, Google executive Philipp Schindler acknowledged that its AI Mode brings in less ad revenue per search than traditional results. At the same time, Alphabet is spending heavily on AI infrastructure, putting further pressure on its cash flow. The company’s net profit also slid 25% year-on-year, largely d...