US Tech Stocks Tumble Amid AI Spending and Earnings Concerns
US tech stocks tumbled for a second day, driven by investor anxiety over artificial intelligence spending that has yet to yield matching earnings. The Nasdaq index sank over 3.5%, following massive losses across major platforms like Alphabet, Amazon, and Intel.
Alphabet and Intel Lead Market Slump
The market retreat follows Google owner Alphabet’s stock price plunging by more than $500bn (£374bn) in a single day of trading. Alphabet revealed that its own AI search summaries were affecting core search advertising revenue. Despite this pressure, Alphabet expects to allocate up to $205bn toward investments this year, almost entirely tied to artificial intelligence. Meanwhile, Intel shares plummeted by as much as 30% on Friday, putting the chip maker on track to shed more than $130bn in value as demand for personal computers weakened.
Earnings Misses Trigger AI Bubble Fears
Major tech firms have ramped up commitments dramatically, with Meta, Alphabet, Oracle, Amazon, and Microsoft slated to spend $800.6bn combined on artificial intelligence in 2026. However, earnings across the sector are falling short of analyst expectations, stoking fears of an overextended market bubble. Amazon shares fell as much as 6% in overnight trading after reporting that spending had multiplied six-fold over three months, committing $220bn this year alone to data centers, network equipment, and servers.
Additional platform losses compounded the downturn. Reddit stock fell by 26% after reporting weaker-than-expected daily user figures alongside warnings that Google’s AI-driven search traffic was hurting referral traffic. Roblox shares dropped nearly 20% due to declining daily active user numbers.
Analyst Reactions to Sector Growing Pains
Market observers noted that investors are no longer rewarding unchecked capital expenditure without immediate returns. Chris Low of investment management firm FHN Financial told Reuters that the market reaction reflected major players showing “some pretty significant growing pains as they aggressively pursue the AI build-out,” suggesting the entire sector faces a slowdown. Kathleen Brookes, research director at trading firm XTB, added that “investors have turned ruthless, punishing any signs of disappointment in [third quarter] earnings.”
Intel Forecasts Continued PC Slowdown
Addressing the hardware side of the downturn, Intel finance chief David Zinsner stated during the firm’s third-quarter earnings report that the company did not expect to bring in more cash than it spent this year, while issuing lower-than-expected revenue guidance for the fourth quarter. “Looking ahead, we see the PC slowdown continuing at least through the first half of next year,” Zinsner said, noting that equipment investments would accelerate further in the following three months despite weaker computer demand.
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