--- title: Intel's Worst Day Since 1974 and a Smaller OpenAI Raise Put the AI Bubble to the Test description: Intel fell 28.6%, the Nasdaq 100 lost $2 trillion in October and OpenAI cut its raise to $20bn. What it means for the AI bubble and for Europe. author: Dr Marina Nani (Editor-in-Chief) date: 2026-11-02T10:30:58.038Z updated: 2026-11-02T10:30:58.053Z canonical: https://www.sovereignmagazine.com/article/is-the-ai-bubble-bursting-october-2026 image: https://cdn.nanimediahouse.com/pexels-35118208.webp categories: Markets, Artificial Intelligence content_type: Analysis publication: Sovereign Magazine schema_type: Article --- On Friday 30th October the Nasdaq dropped 2.9%, its largest one-day percentage fall since 5th June, after disappointing results from Intel and Amazon added to worries about how much money technology companies are pouring into artificial intelligence, Reuters reported. The S&P 500 fell 1.8% and the Dow Jones 1.1%. By the close, the Nasdaq stood 7.8% below the record it set on 6th October. More than $2 trillion was on course to be wiped off the Nasdaq 100 over the month, according to Reuters, and the S&P 500 technology sector had its biggest monthly loss since March 2025. If you hold a global tracker fund or a pension invested in world equities, a large share of your money sits in a handful of these American technology companies. The question of whether the AI bubble is bursting is no longer one for traders alone. ## Intel, Amazon and Alphabet Earnings Intel shares fell 28.6% on Friday after the chipmaker gave a profit forecast for the fourth quarter that missed expectations. The Associated Press reported that it was Intel's worst day since 1974. The damage spread across the chip sector. Nvidia lost 4.2%, AMD fell 10.9% and the main US semiconductor index dropped 7.2%, leaving it more than 15% lower for the month. Amazon fell 1.4%. The AP noted that the company burned through $42.4 billion of free cash over the previous 12 months while spending $94.8 billion on property and equipment, much of it on data centres. A day earlier, Alphabet shares had fallen more than 12%, the worst day in the company's history. ## OpenAI's $20 Billion Funding Round The selloff reached private markets too. OpenAI has cut the target for its latest funding round from $30 billion to $20 billion, and the valuation it is seeking from $1.4 trillion to $1.25 trillion, Reuters reported on 30th October, citing the Financial Times. The first close of the round is expected to raise less than $20 billion after some investors reduced their allocations. A consortium from the United Arab Emirates that includes the investment company MGX is expected to be the largest investor, with Founders Fund, Coatue, Sequoia and Andreessen Horowitz also expected to take part. According to the same report, OpenAI is aiming to close the round before Anthropic's expected stock market listing in mid-November, as the two companies draw on many of the same investors. OpenAI itself is aiming to list in 2027. ## Meta and the Cost of AI Spending The ratings agency S&P Global changed its outlook on Meta from stable to negative on 30th October, Reuters reported. S&P forecasts that Meta will run free cash flow deficits of $39 billion in 2026 and $71 billion in 2027 as it spends between $135 billion and $145 billion on capital projects. Meta disputes the assessment. JPMorgan expects AI capital spending of about $900 billion in 2026 and $5.5 trillion globally by 2030, while Morgan Stanley expects AI infrastructure spending to pass $1 trillion next year, according to Reuters. Microsoft is reported to be preparing a $25 billion bond sale, its first in more than nine years. ## China's AI Bubble Has Already Burst For a picture of what a burst looks like, Reuters pointed on 26th October to China. The STAR50 index of Chinese technology and chip companies has fallen about 40% in less than four months, erasing roughly $480 billion in value. The index still trades at close to 100 times earnings, down from almost 250 times at the peak. The Nasdaq 100, by comparison, trades at about 30 times earnings. Shares in robot maker Unitree have halved since its listing in August, and chip designers MetaX and Moore Threads have halved since July. ## Dot-Com Bubble vs AI Bubble The comparison everyone reaches for is the dot-com crash. The Nasdaq closed at a peak of 5,048.62 on 10th March 2000 and fell to 1,114.11 by 9th October 2002, a loss of about 78% over two and a half years. One difference stands out this time: profits. Of the S&P 500 companies that have reported results for the third quarter, 82% have beaten forecasts, and earnings growth is running at about 31%, according to Reuters. Many of the companies leading the AI boom make large profits today, which was not true of most dot-com stars in 2000. Official warnings have grown louder all the same. Bank of England Governor Andrew Bailey told the [BBC](https://www.bbc.com/news/articles/cv8e30enrkxyo) on 1st October that asset prices could face a correction and that markets had priced every company as a winner, pointing to Netscape as an early leader that did not last. In October the International Monetary Fund warned against complacency about an AI pullback. In its correction scenario, world output would be 1.1% lower by 2028 and US output 1.8% lower, Reuters reported. ## Europe's Position in the AI Selloff European markets held up better. ASML fell about 5% on Friday and Infineon, STMicroelectronics and BESI lost between 3.3% and 4.8%, but the STOXX 600 index was still heading for its best month since June, Reuters reported. Europe's two technology champions also had strong news in October. ASML said on 14th October that it could not fully meet demand for its chipmaking machines in 2027 or 2028 and raised its outlook. SAP reported quarterly revenue above €10 billion for the first time on 21st October and lifted its forecast for 2026. Europe's own AI building programme is about to reach a milestone. Bids for the EU's AI gigafactories close on 12th November, with up to seven sites planned in at least seven member states and private investment expected to exceed €20 billion, according to the [EuroHPC Joint Undertaking](https://eurohpc-ju.europa.eu/eurohpc-joint-undertaking-launches-ai-gigafactories-call-2026-07-30_en). The winners are due to be chosen in early 2027. You can read how the wider plan has progressed in our report on [Europe's tech sovereignty plan five months on](https://www.sovereignmagazine.com/article/eu-tech-sovereignty-five-months-on). ## What to Watch This Week Apple reports results on Monday 2nd November. AMD follows on Tuesday 3rd November after the US close, and Qualcomm and Arm report on Wednesday 4th November, according to the companies. Americans vote in the midterm elections on Tuesday, and the October jobs figures arrive on Friday. Each set of results will show whether AI spending is turning into revenue fast enough to satisfy the people funding it. Anthropic's listing, expected in mid-November, will show how much appetite remains for the next generation of AI companies. ## Questions About the AI Bubble **Q: Is the AI bubble about to burst?** Nobody can time a bubble with confidence. Warning signs include very high valuations, heavy borrowing to fund data centres and falling free cash flow at the biggest spenders. Supporting factors include strong company profits and rising demand for chips. In late 2026 the Bank of England and the International Monetary Fund both warned that a sharp correction in AI-related shares is possible. **Q: Are AI stocks going to crash?** No one can say for certain. AI-related shares can fall sharply when results disappoint or spending rises faster than revenue, as several did in October 2026. A fall of 20% or more from a peak is usually called a bear market, while a collapse on the scale of the dot-com crash, when the Nasdaq lost about 78%, would need a much deeper loss of confidence in the technology's earnings. **Q: Why is the AI bubble not bursting?** The biggest AI companies are earning large and growing profits, which sets them apart from most loss-making dot-com firms of 2000. Demand for AI chips and cloud computing also remains strong. That support can weaken if spending keeps rising faster than the revenue it produces. **Q: Is it possible for the AI bubble to burst in 2026?** It is possible. In China, the STAR50 index of AI and chip stocks fell about 40% in under four months during 2026, which many analysts describe as a burst. In the United States, AI shares fell sharply in October 2026, with the Nasdaq 100 on course to lose more than $2 trillion in value over the month.