If You Looked at the Stock Market This Week, It Wasn't Pretty

If you looked at the stock market this week, it wasn't pretty. The Nasdaq had its worst day since June, Google stock crashed, and Intel had its worst day since 1974. My dad wasn't even alive then.

How bad was it?

Pretty bad. Alphabet (Google's parent company) fell about 12% on Thursday, which is the worst day it has ever had. Then Intel dropped almost 29% on Friday.

Does this mean the whole industry could collapse?

Probably not. But it is a warning that the "AI bubble" everyone talks about could actually pop. We already saw it happen in China, where the STAR 50 (basically their AI and chip index) fell about 40% in less than four months.

!STAR 50 index, 2026 closes|Chart: 2026 Jarrus

So why is everything going down?

Spending is growing faster than earnings. Companies are racing to build AI, and they're spending crazy amounts of money to do it.

And people really are using AI. In 2024 Google processed 9.7 trillion AI tokens a month, and in 2026 it's 3.2 quadrillion. That's over 300 times more in two years.

!Google's monthly AI tokens, 2024 to 2026

Then what's the problem?

The money isn't coming back fast enough. Amazon, Google, Microsoft and Meta are spending around $700 billion on AI this year, and that spending grows about 70% a year. The cash they actually make only grows about 23% a year.

Google's revenue still grew 25% last quarter, which is great. But it also had negative free cash flow of $9 billion, meaning it spent more money than it made.

!Big Tech AI spending vs. free cash flow

So suddenly, the market is starting to realize this isn't sustainable. Companies ramped up their spending way faster than their profits.

What about Intel?

Intel is kind of its own thing. Its AI sales actually went up 78%, but people aren't buying PCs because memory chips got so expensive. And memory is expensive partly because AI companies are buying all of it.

How far could it drop?

I think the AI market could go down 30-40% from its peak. That sounds like a lot, but the Nasdaq dropped about a third in 2022, and China's AI stocks are already down 40%. I could be wrong though, and it might not fall that far.

Should I buy the dip?

I wouldn't yet. I don't think it has fully dipped. Apple reports earnings on November 2 and Nvidia reports in mid-November, and if Nvidia's numbers are bad, it could keep falling.

Should I sell?

If you trade actively, it might be smart to sell some of your AI stocks for now. If you're investing long term, no.

Think of it like a smaller version of 2008. The market fell more than half, but if you held on, you were back to even by 2013 and way ahead today. If you sold, you locked in your losses.

That's also why I never let one stock be more than 25% of my portfolio. After the dot-com crash in 2000, the Nasdaq took about 15 years to get back to where it was, so you don't want everything riding on one sector.

So what now?

The economy is still pretty strong, and I think stocks will bounce back eventually. Just don't panic, keep your portfolio spread out, and wait it out.

This post is for educational purposes only and isn't financial advice. Always do your own research before investing.

Sources: CNBC, Morningstar, The Motley Fool, Reuters, Alphabet and Intel earnings reports (Q3 2026), Google I/O 2026.