Big tech had a bruising week as investors questioned when the huge sums being spent on AI will pay off, yet most other companies quietly moved higher.
Read this article to understand:
- What happened to big tech stocks this week
- Why other stocks and the broader economy remain resilient for now
- How inflation, oil prices and geopolitics remain a concern
Some weeks in markets are quiet. This was not one of them
Some weeks in markets are quiet. This was not one of them. In five trading days, investors had to absorb results from the world’s largest technology companies, decisions from three central banks, two elections and continued tension in the Middle East. Even so, global equities ended the week higher. The US S&P 500 rose by about 1.3 per cent and Europe’s Stoxx 600 gained around two per cent.
Big tech results were the main story. For two years, investors have rewarded companies simply for spending heavily on artificial intelligence. This week, they started asking when that spending will pay off.
Alphabet, Google’s parent company, fell by 12.6 per cent on Thursday, its worst day on record, after advertising revenue grew at its slowest pace in over a year. Amazon fell by seven per cent after hours when it revealed it had spent $77 billion on buildings and equipment in a single quarter, well above the $59 billion expected. Intel fell by 23 per cent after giving a weak sales forecast. A reminder the AI investment cycle will not be a linear journey.1
There was an important detail beneath the headlines. On Thursday, 406 of the 500 companies in the S&P 500 rose even as the index fell. A version of the index that gives every company the same weight reached its highest level since August. In other words, this was not a broad retreat from equities. Money moved away from a handful of tech giants and into the wider market.
Central banks chose to wait. The US Federal Reserve kept interest rates unchanged and described the economy as “strong”, but two members voted for an immediate rise. Arguably, the data supported that view. The US economy grew at an annual rate of 3.4 per cent in the third quarter, the number of people making new unemployment claims fell to its lowest level since 1969 and inflation rose to 3.6 per cent.
The European Central Bank also held rates at 2.5 per cent and pointed to a likely rise in December. Its President, Christine Lagarde, announced she will step down early, in February.
In Europe, France had a better week. A credit rating agency surprised investors by deciding not to downgrade the country. On Monday, the extra cost France pays to borrow compared with Germany fell by its largest amount in a single day since March 2020. Yet French consumer confidence fell to its lowest level since 2013, and the euro dropped to a 17-month low against the dollar.
Energy remains a source of concern. Brent crude oil traded between $113 and almost $118 a barrel, moving with each new headline about talks with Iran or possible military action. European gas prices passed €100 for the first time since the 2022 energy crisis, which is concerning as winter approaches.
The US economy is growing strongly, jobs are plentiful and most companies are doing well, even when the biggest names stumble
Elsewhere, Brazilian shares fell by almost 14 per cent in a single day after President Lula’s surprise re-election.
Looking ahead, there is still plenty to watch. Inflation remains higher than central banks would like, oil is expensive and next week’s US midterm elections could unsettle energy markets. But this week showed real strength under the surface. The US economy is growing strongly, jobs are plentiful and most companies are doing well, even when the biggest names stumble.2
Past performance is not a reliable indicator of future results.
Reference(s)
- The companies mentioned are for illustrative purposes only and do not constitute an investment recommendation.
- Source of all the data for this article: Aviva Investors and Bloomberg. Data as of 30 October 2026.
