The artificial intelligence trade suffered its third consecutive weekly decline as investors confronted the immense financial costs of the technology boom. Major technology companies faced severe market corrections after reporting earnings that highlighted soaring expenditures and missed revenue projections.

While the tech sector reeled, defensive assets and traditional manufacturing found fresh momentum. Investors rotated capital away from volatile equities and into sectors offering tangible earnings, giving Michigan automakers a notable market rebound.

Big Tech Faces the Cost of AI Spending

The market downturn accelerated when major tech corporations revealed the hefty bills tied to their artificial intelligence ambitions. Alphabet Inc. reported a revenue miss on Wednesday, October 28, burned approximately $9 billion in cash, and announced plans to increase spending next year. This prompted a 13% plunge in Alphabet shares on Thursday—the worst single-day drop in the company's history—erasing about $482 billion in market value.

Amazon.com Inc. compounded the sector's woes by posting earnings of $1.89 a share, falling short of the $1.96 expected, and projecting a 2027 capital budget that will exceed its current year outlay of roughly $220 billion. Meanwhile, Intel Corp. issued fourth-quarter revenue guidance well below estimates and warned it would burn cash this year, triggering a 28% stock plunge on Friday for its steepest one-day decline in more than 50 years.

By Friday midday, the Nasdaq 100 had dropped 2.6% to its lowest level since early August, marking its third straight weekly loss.

Federal Reserve Decisions and Economic Indicators

Amid the market turbulence, the Federal Reserve held interest rates steady at 3.75% to 4% in a 10-2 vote on Wednesday, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a rate hike. Federal Reserve Chair Kevin Warsh declined to signal a December policy move but acknowledged the AI-driven sell-off, noting that higher interest rates affect broad economic conditions and that investors are growing more selective.

Economic data released on Thursday presented a mixed picture:

  • Third-quarter GDP growth reached 3.4%, beating the 3.2% consensus.
  • The Personal Consumption Expenditures (PCE) price index accelerated to 3.6% from 3.4%.
  • Traders priced in a 74% chance of a December interest rate hike, down from 85% immediately following the Fed meeting.

As investors rotated out of technology stocks, the 10-year Treasury yield slipped to 4.94%—touching 4.89% on Friday—marking its lowest point since early September. Defensive sectors capitalized on the shift, with health care stocks climbing more than 10% in October to secure the sector's widest monthly lead over the S&P 500 since November 2000.

Michigan Automakers Secure a Rebound

Moving in the opposite direction of the tech sell-off, Michigan automakers experienced a strong market recovery.

General Motors Co. gained about 14% for its biggest weekly rise since October 2025. GM shares jumped 5.5% on Tuesday following the company's announcements that it will move its listing to the Nasdaq on November 17 and prepare its Lansing Delta Township plant for hybrid production.

Ford Motor Co. shares rose about 5% following its Wednesday earnings report. Ford posted revenue of $49.53 billion and adjusted earnings of 49 cents a share, beating analyst forecasts of $46.24 billion and 41 cents, respectively. The automaker also raised the low end of its full-year profit outlook to $10.5 billion.

"Ford delivered a strong quarter as we're entering a defining phase of the company's transformation," said CEO Jim Farley.