Technology, oil, and AI: Key market trends
Tech stocks slipped, AI spending faced tougher questions, and oil pushed past $115 a barrel. Here’s what moved markets last week, and what to watch as Microsoft, Alphabet, and Amazon report.
Financial markets were marked by volatility on Wall Street, concerns about the profitability of artificial intelligence investments, and rising oil prices. Although several indexes started the week with gains, technology stock declines toward the end of the week increased investor caution.
The performance of major indexes reflected growing attention to corporate growth, investment costs, and companies’ ability to generate sustainable profits.
Wall Street ends the week with mixed results
Major U.S. indexes finished with mixed performances. The S&P 500 fell approximately 0.5%, while the Nasdaq Composite lost around 0.7%. In contrast, the Dow Jones rose about 0.4%, and the Russell 2000, which tracks smaller-cap companies, gained approximately 2%.
These differences showed that market pressure did not affect all segments equally. Major technology companies struggled, while other sectors and smaller companies showed greater resilience.
Thursday was one of the most challenging sessions: the Nasdaq fell 2.6%, and the S&P 500 dropped 1.2%, amid selling pressure on stocks linked to artificial intelligence and semiconductors.
Artificial intelligence faces questions about profitability
Artificial intelligence remained at the center of attention, but investors took a more demanding approach. They began questioning whether massive investments in data centers, chips, and technology infrastructure would generate enough profits to justify their costs.
Meta was one of the most notable examples. Although it reported revenue above expectations and a favorable outlook for the following quarter, its shares fell more than 7% on Thursday. The company raised its 2026 capital expenditure forecast to between $135 billion and $145 billion, increasing concerns about financing and the future profitability of its AI projects.
Tesla also came under pressure. The company reported adjusted earnings per share of $0.48, but its shares declined following the results and investment outlook. It also lowered its 2026 capital expenditure forecast from $25 billion to approximately $20 billion, renewing questions about the pace and financial requirements of its technology and robotics projects.
The market reaction delivered an important message: beating earnings expectations does not guarantee a stock price increase. Investors also assess how much money a company needs to grow and when it expects to recover those investments.
Oil prices increase inflation concerns
Another significant factor was rising oil prices, driven by geopolitical tensions in the Middle East and concerns about energy supply.
Brent crude exceeded $115 per barrel on Friday, reaching levels not seen for several months. U.S. West Texas Intermediate (WTI) crude also remained above $100 per barrel at the end of the week.
Sustained increases in energy prices can raise transportation, production, and distribution costs while reducing consumers’ purchasing power. If these pressures spread throughout the economy, inflation could take longer to ease.
This scenario complicates the Federal Reserve’s decisions, as persistent inflation could limit its ability to cut interest rates. Investors therefore also monitored U.S. Treasury bonds, whose yields declined during the week as demand for assets considered safer increased.
Sector rotation gains momentum
While technology stocks struggled, other market segments performed more favorably. Smaller-cap companies outperformed the Nasdaq and S&P 500, while sectors such as healthcare and consumer staples showed greater resilience.
This movement suggests that some investors are looking for opportunities beyond major companies linked to artificial intelligence. However, one week of sector rotation does not, by itself, confirm a lasting change in the market trend.
For investors, this dynamic reinforces the importance of portfolio diversification and avoiding excessive concentration in a single sector. It also demonstrates that investment performance depends on factors such as valuations, earnings prospects, and economic conditions—not just technological trends.
What investors should watch next
Attention now turns to several important developments: the Federal Reserve’s interest rate decision, earnings reports from major technology companies, and new U.S. economic data.
Microsoft and Alphabet are scheduled to report earnings on Wednesday, October 28, while Amazon is expected to report on Thursday, October 29. Investors will look for signs of growth, profit margins, and tangible progress in monetizing artificial intelligence.
Data on U.S. economic growth and inflation will also be important, as they could change expectations for monetary policy and bond market performance.
The key question is whether corporate earnings can support current market valuations amid high technology costs, geopolitical uncertainty, and pressure from rising energy prices.
Markets are demanding more than promises of growth: they now need evidence of profitability, financial discipline, and sustainable results. For investors, monitoring these factors and managing risk will be essential as markets face the possibility of further volatility.
The opinions in the preceding commentary are as of the date of publication and are subject to change. Information has been obtained from third party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete. This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. We may execute transactions in securities that may not be consistent with the report’s conclusions. Investors should consult their financial advisor on the strategy best for them. Past performance is no guarantee of future results. For illustrative purposes only. Does not represent an investment recommendation. For more information, please see our Social Media Disclosure.
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Sources: Bloomberg, Reuters Energy, CNBC Markets, ISM Manufacturing Report