Key Highlights

● The Roundhill Magnificent Seven ETF fell 2.25% to $67.99 in early trading.

● Alphabet fell 12.6% on Thursday, its worst day since its 2004 IPO.

● Amazon reaffirmed about $220 billion of 2026 capex and fell about 7% premarket.

● Microsoft is the relative winner after spending less than feared.

The megacap technology stocks that powered the market for years are now its biggest weight. The Roundhill Magnificent Seven ETF fell 2.25% to $67.99 in early trading on Friday, according to market data, as concerns about massive AI capital expenditures and disappointing Earnings weighed on the group.

The leaders become the laggards

S&P 500 futures were down about 1.1% and Nasdaq-100 futures about 2.6% around 8 a.m. ET, according to market quotes. Dow futures, by contrast, were roughly flat, helped by energy and health care. Today is the last trading day of October, so the selloff lands just as portfolio managers mark their monthly performance, and the gap between megacaps and the rest of the market is impossible to miss.

Three blows, and a relative winner

Alphabet (NASDAQ:GOOGL) started it. The Google parent fell 12.6% on Thursday, its worst day since its 2004 IPO, erasing roughly $500 billion of market value, according to market reports. Its third-quarter EPS of $2.12 missed the $3.00 estimate, capex hit a record $51.4 billion and free Cash Flow was negative $9.1 billion for a second straight quarter.

Amazon (NASDAQ:AMZN) followed after Thursday's close. It reaffirmed 2026 capex of about $220 billion and reported trailing 12-month free cash flow of a $42.4 billion outflow, versus a $14.8 billion inflow a year earlier, according to one market brief. Shares were down about 7% premarket despite AWS growth of 39%. "The market is punishing the cash burn," one market commentator wrote.

Nvidia (NASDAQ:NVDA) was off about 2.7% premarket, according to retail-trading data, as the AI hardware complex sold off alongside Intel (NASDAQ:INTC)'s 25% plunge.

Microsoft (NASDAQ:MSFT) has been the relative winner. It reported Revenue of $92.28 billion and Azure growth of 48%, with capex of $45.2 billion coming in below the highest estimates, according to one report. The same commentator said Microsoft "spent less than feared and held up."

Meta Platforms (NASDAQ:META) reported the prior week and has already gone to the Equity market, raising $37.5 billion through common stock and a mandatory convertible preferred after a quarter with free cash flow of negative $2.1 billion, according to one report. Apple (NASDAQ:AAPL) has yet to report; its results are due Monday, Nov. 2, after the close, and the stock is up about 28% this year, according to media reports.

Why it matters, the bull case and what to watch

Because the S&P 500 is weighted by market value, a handful of megacaps account for a large share of its moves. That concentration is now working in reverse. One market commentary estimated that an S&P 500 excluding AI stocks was outperforming the full index by about 6.4 points in October. Through Oct. 27, the equal-weight RSP was up 4.57% for the month versus 0.92% for SPY.

"Strong AI Demand is no longer enough on its own," one senior market analyst said. The analyst said companies must show that capital spending is translating into sustainable revenue growth, margins and free cash flow.

Not everyone sees doom. One brokerage called the Amazon selloff a "Spend-Scare Overreaction," according to a headline, and another raised its Amazon target to $335. Cloud growth remains strong: Google Cloud revenue rose 103% and Amazon projects AWS growth above 40% in 2027 and 2028.

Watch the S&P 500's October close; futures imply the index could finish the month roughly flat to slightly negative, an inference from current levels. Next week brings Apple on Nov. 2, the midterms on Nov. 3 and AMD (NASDAQ:AMD)'s report, along with the Nov. 6 jobs report.