A sharp split in U.S. stock indexes in October 2026 raised questions about the durability of AI-linked earnings, even as spending projections for major cloud and technology firms continued to rise.
Nasdaq's October review recorded a 6.6% drop in the Nasdaq-100, compared with a 0.9% decline for the S&P 500. The S&P 500 Equal Weight Index advanced 5%. Nasdaq said technology and communication services accounted for much of the weakness.
Goldman Sachs Research forecast that the largest U.S. hyperscalers would direct $800 billion to capital expenditures in 2026, 94% more than in 2025, then $1.2 trillion in 2027 and $1.4 trillion in 2028. It cautioned that the figures cover total hyperscaler capital spending, not AI alone.
Goldman linked nearly half of the S&P 500's 2026 earnings-per-share growth to AI investment, but expects that contribution to diminish over time. The firm also said this spending supports earnings for chipmakers, hardware suppliers, industrial firms and utilities. Ben Snider, chief U.S. equity strategist at Goldman Sachs Research, said the firm expects earnings growth to “decelerate, not collapse” in coming years.
AI companies financed more infrastructure with money from outside their businesses during the first half of 2026, especially through debt, the Bank of England said. The Institute of International Finance reported that global debt exceeded $365 trillion in that period. Reuters reported that Sheila Bair, former chair of the Federal Deposit Insurance Corp., saw similarities between current AI borrowing and vulnerabilities before the 2008 financial crisis.
The International Monetary Fund's October outlook projected global growth of 3.1% in 2026 and 3.4% in 2027, with headline inflation at 4.7% and 4.1%, respectively. It listed a reassessment of AI expectations, conflict escalation, renewed trade tensions and fiscal vulnerabilities among the risks to its projections.
The International Energy Agency's Oct. 14 report put Brent futures at about $107 a barrel, 13% above early-September levels. The agency said renewed attacks around regional energy facilities and tanker traffic threatened an improvement in oil supply. The Bank of England said Asian economies reliant on imported energy were especially exposed to Gulf disruptions. It said higher energy costs can strain household finances and businesses, particularly smaller consumer-facing firms and heavily indebted companies.
The Bureau of Economic Analysis said U.S. real GDP grew at a 3.4% annualized pace in the third quarter, with investment, consumer spending and government outlays contributing. The second estimate is scheduled for Nov. 25 at 8:30 a.m. EST.
