The US stock market is facing an intriguing challenge: despite a strong economy, stock indices are falling, especially technology stocks which are being heavily sold off.
Investors have started questioning whether the massive investments big tech companies are making in AI will yield returns sufficient to justify the costs.
Although AI remains a key global investment theme, the market is increasingly demanding tangible results beyond future growth promises.
This was reflected in the US stock market last night, with the Nasdaq index dropping 1.37%, the Dow Jones down 0.25%, and the S&P 500 falling 0.30%.
Nasdaq faced the most pressure among the major US indices, despite Q3 economic data beating market expectations.
Reuters reported that on 29 Oct 2026, all three major US stock indices closed lower, with Nasdaq declining the most, as investors reassessed the value of AI investments in large tech firms amid key earnings reports and inflation data.
US preliminary Q3 GDP grew 3.4%, exceeding analyst forecasts, showing ongoing economic strength.
However, this strong economic picture did not support the stock market, as investors focused more on tech company earnings and risks associated with AI investment costs.
A major pressure point was Alphabet, Google's parent company, which reported revenue below market forecasts while rapidly increasing cash spending on AI investments.
This raised investor concerns that the company may face significant costs before fully monetizing these investments, causing Alphabet’s stock to drop sharply and dragging down Communication Services shares.
Meanwhile, semiconductor stocks ended a four-day rally, as investors began differentiating companies that can fund AI investment with their own cash flow from those requiring substantial borrowing or cash outlays.
On another front, the market is watching interest rate direction after the Federal Reserve kept rates unchanged at its latest meeting, noting persistent price pressures and the need for more economic data before deciding future policy.
Thus, the robust economic data may increase concerns that the Fed will not ease monetary policy as quickly as hoped.
Kasikorn Securities analysts assessed that the US economy remains strong, with Q3 2026 GDP growing 3.4% year-on-year (QoQ annualized), above the 3.2% forecast and up from 2.2% in the previous quarter, supported by investments, especially in computer equipment, consumption, and government spending.
However, inflation remains a concern, with September’s headline and core PCE indices at 3.6% and 3.1% year-on-year respectively, above the Fed’s 2% target, increasing the likelihood of a 0.25% rate hike in December and prompting continued reductions in tech stock exposure.
The strategy foresees ongoing market volatility, recommending increased caution and defensive positioning in stocks expected to have strong earnings at lower price levels, such as AWC and MTC for today.
Pi Securities analysts noted the US stock market is pressured by disappointing tech earnings, especially Alphabet’s, while stronger-than-expected economic growth and persistent inflation make interest rate direction a key factor to watch.
They believe Value stocks have better potential returns than tech amid current volatility, advising a Value Play strategy to diversify into fundamentally strong and reasonably valued stocks rather than concentrating solely on tech.
For Thai stocks, recommended sectors include banking (BBL, KBANK, KTB, SCB), telecommunications (ADVANC), retail (CPALL, CPN, HMPRO, BJC), and tourism (AOT, MINT).
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