US stocks kept sliding as concerns deepened over the rising cost of the artificial intelligence (AI) build-out. The tech-heavy Nasdaq opened on Friday at its lowest level in more than two months, down 2.5%, as investors pulled back from major technology shares.
Intel shares extended their overnight decline into early trading, falling as much as 30%. The chipmaker had warned of a weaker computer market even as it plans to increase its spending on AI, and the update rattled investors.
Intel, Amazon and Alphabet shares come under pressure
Amazon shares fell as far as 6% before recovering some ground. The drop followed earnings reported on Thursday evening that fell short of investors’ expectations, and the stock was still down about 1.6% in Friday trading.
Alphabet, the owner of Google, continued to fall after a steep slide on Thursday. Its value dropped by more than $500bn that day after the company revealed that its own AI summaries were affecting its core search advertising revenue. On Friday it was down about 1% in early trading.
Intel was on track to lose more than $130bn in value, making it the biggest loser of the day.
Spending outpaces cash at Intel and Amazon
On Thursday, Intel’s finance chief, David Zinsner, said the firm did not expect to bring in more cash than it spent this year. The company also forecast lower-than-expected revenue for its fourth quarter.
“Looking ahead, we see the PC slowdown continuing at least through the first half of next year,” he said in the chipmaker’s third-quarter earnings report. In the earnings call, he said the firm had significantly ramped up equipment investment in the third quarter and expected that to be “even more significant” over the following three months.
Amazon also said it was spending more cash than it was making. Its spending had increased six-fold over the span of three months.
Reddit and Roblox fall on weaker user figures
Reddit stock was down 26% after the social media platform reported weaker-than-expected daily user figures. It also warned that Google’s growing AI-driven search was hurting referral traffic.
Shares in Roblox, the online game platform, fell nearly 20% as its daily active user numbers dropped.
Several major tech firms have reported earnings this week, including Microsoft. Analysts said questions were being raised about how the huge investments in AI would pay off.
Chris Low, from investment management firm FHN Financial, said most of the movement in the stock market reflected reactions to some of the biggest tech players, such as Amazon and Google. He said the companies were “showing some pretty significant growing pains as they aggressively pursue the AI build-out.”
“The thinking is that these signs suggest that the entire sector is going to slow down,” he said.
