[October 23, 2026] NASDAQ down 2.6%. Why AI stocks were sold despite falling interest rates

Good morning! This is studio AT😊

I felt a bit relieved seeing the rebound in AI stocks yesterday, but this morning the view is different again🥶

Even though US interest rates fell, the NASDAQ dropped significantly. It is a confusing movement if you assume that “falling interest rates are a tailwind for tech stocks.”

This time, I will break down the parts that cannot be seen through interest rates alone, separating them into the overall market and corporate earnings📊

First, let’s look at this morning’s numbers

These are the closing prices for October 22, 2026, US time. The percentage changes from the previous day use rounded figures from reports.

• S&P 500: 7,663.43 points (-1.2%)

• NASDAQ Composite: 26,008.86 points (-2.6%)

• Dow: $52,867.98 (+$11.89, less than +0.1%)

• Russell 2000: 2,784.03 points (+0.1%)

• NVDA: -4.4% from the previous day

• US 10-year Treasury yield: 4.97% at the end of the day’s trading (the observation time differs from the closing price)

Even looking just at the indices, the NASDAQ and the Dow/small-cap stocks moved in different directions. It is probably best not to assume that “all US stocks were sold off” as a whole.

🌏 Macro: The “reason” for falling interest rates is also important

A decline in interest rates is a factor that tends to support the valuation of growth stocks, where future earnings are emphasized. However, stock prices are not determined by that alone.

The Associated Press reported that on this day, as AI-related stocks were being sold, US Treasuries were bought as a safe-haven asset.

When bond prices rise, yields fall. In other words, I interpret this as a situation where funds moved toward bonds due to caution, rather than “the environment becoming safe to buy stocks.”

Even if interest rate figures are falling, if anxiety about corporate earnings and investment burdens intensifies behind the scenes, headwinds for stocks will remain. I want to keep an eye on this point this morning.

The fact that the Dow and Russell 2000 were slightly higher while the NASDAQ was weak is also a reason to check the contents of the indices. If your holdings are skewed toward AI-related stocks, the decline you experience may be greater than that of the overall market.

🔎 Micro ① Meta: Looking at sales growth and investment burdens separately

In Meta’s earnings report for the July-September 2026 quarter released on October 21, revenue was $64.6 billion, a 26% increase year-over-year.

Growth in the core business continues. On the other hand, looking at the cash flow movements reveals another side.

• Operating cash flow: $32.79 billion

• Capital expenditures: $34.91 billion (including principal repayments on finance leases)

• Company-defined free cash flow: -$2.12 billion

These are all figures for the July-September 2026 quarter.

“Free cash flow is negative” and “the core business is in the red” are not the same thing. Even if operating activities are generating funds, if investments exceed that amount, the cash remaining on hand will decrease.

What concerns me is not just the size of the investment, but how much profit can be expected from it in the future. I want to track sales growth and investment recovery as a set.

Expecting AI growth and judging the current stock price as undervalued are also different things. I want to make sure not to conflate these.

🔧 Micro ② Lam: Stock price falls despite strong earnings

For semiconductor manufacturing equipment maker Lam Research, it also seems necessary to look at the earnings figures and the stock price reaction separately.

For the quarter ended September 27, 2026, announced on October 21, revenue was $8.22 billion. This was a 22% increase from the previous quarter.

For the next quarter ending December 27, 2026, the company expects revenue of $8.6 billion ± $0.4 billion and earnings per share of $2.33 ± $0.15.

Even so, the stock price fell 11.8% on October 22. According to the Associated Press, the median forecast for earnings per share for the next quarter fell slightly short of market expectations.

In addition to whether it is growing, “whether it can exceed expected levels” affects the stock price. It cannot be said definitively that good numbers always mean it will rise, or that bad price action means the business is also bad.

I want to look at each company individually to see which sector’s demand is leading to profits, rather than judging solely by the semiconductor category.

☕ I think about this while watching these points

When it goes up yesterday and down today, I tend to rush into trading. But it might be a bit early to decide that it has “become cheap” just because the price has dropped.

• Whether the decline in interest rates is a settled movement or a sudden movement due to caution

• Whether investment in AI is leading not only to sales but also to profits and cash

• Are expectations for stock prices too high relative to earnings growth?

I will check this, and if I decide to add to my positions, I will do so only within a range that leaves me with a comfortable cash buffer. This morning, rather than ‘buying because it went down,’ I think I will spend time re-reading the earnings reports of companies I have been interested in😊

I also post daily notes on US stocks and interest rates on X.
studio AT’s X: https://x.com/studioAT3

*This is a personal analysis and record. It does not recommend the buying or selling of any specific stocks.

Sources

・AP News “How major US stock indexes fared Thursday, 10/22/2026” (US closing prices for October 22)
https://apnews.com/article/1970e79d013cbddcae89c53b4b98f384

・AP News “Sharp drops for AI stocks overwhelm markets worldwide as oil prices jump” (US stock and bond market for October 22)
https://apnews.com/article/33767691a4a0730b96d6f0c5100ea9b2

・Meta “Meta Reports Third Quarter 2026 Results” (Published October 21, 2026)
https://investor.atmeta.com/investor-news/press-release-details/2026/Meta-Reports-Third-Quarter-2026-Results/default.aspx

・Lam Research “Financial Results for the Quarter Ended September 27, 2026” (Published October 21, 2026)
https://newsroom.lamresearch.com/2026-10-21-Lam-Research-Corporation-Reports-Financial-Results-for-the-Quarter-Ended-September-27,-2026