Nasdaq 100 Suffers Worst Monthly Loss Since March 2025

The Nasdaq 100 recorded its worst monthly loss since March 2025 during October, dropping 9% from its early-month peak. This decline signals a potential correction in the artificial intelligence trade, driven by investor concerns that hyperscalers—including Amazon, Alphabet, Meta, Oracle, and Intel—are experiencing deteriorating finances and negative cash flow despite aggressive capital expenditures.

Market analysts suggest the AI bubble may be entering its final stages. David Rosenberg noted that the market is pricing in lower returns on AI spending, while Paul Dietrich of Wedbush Securities predicted the bubble could end before 2027, with investment peaking in 2026.

To manage this volatility, financial strategists are recommending a shift toward defensive assets. Chris Galipeau of Franklin Templeton observed that high earnings expectations have led to market punishment and rotation. In response, firms like BCA Research are advocating for a barbell strategy to balance high- and low-risk assets, while others suggest diversifying into gold, healthcare, utilities, and international value stocks.