Tech stocks tumble as AI spending costs spark investor fears

Summarised from 7 outlets · 9 reports · Updated 30 Oct, 15:11 · Archive

Major tech companies' disappointing earnings have triggered a global stock market sell-off over concerns about the pace and cost of artificial intelligence investment.

A global technology sell-off has deepened after disappointing earnings from major US tech companies renewed investor concerns about artificial intelligence spending and returns. Google parent Alphabet shed more than $500bn in value on Thursday after revealing its own AI summaries were affecting its core search advertising revenue. The losses continued on Friday as other major tech firms reported earnings that fell short of expectations.

Amazon reported third-quarter revenue and net income that both missed Wall Street estimates, along with negative free cash flow of $42.4bn for the second consecutive quarter. Despite reporting 39 per cent growth in its Amazon Web Services cloud division to $46bn, the company reaffirmed its capital expenditure forecast of $220bn for 2026. Intel warned of ongoing softness in the PC market and gave lower-than-expected guidance for the fourth quarter, forecasting revenue between $15bn and $16bn against analyst estimates of $17.1bn. Intel's finance chief said the firm did not expect positive cash flow this year and that PC market slowdown would continue at least through the first half of next year.

The tech-heavy Nasdaq opened down more than 2 per cent on Friday, marking its lowest level in more than two months. Intel shares fell around 25 to 30 per cent, wiping roughly $130bn from the company's value. Amazon shares fell as far as 7 per cent in premarket trading before recovering slightly. Other tech stocks including Nvidia, Microsoft, Arm and major European semiconductor names including ASML also declined. Roughly $3 trillion has been wiped from the tech-heavy index since its peak on 6 October.

Investor concerns centre on whether the massive capital expenditure by tech companies on data centres and AI infrastructure will generate sufficient returns to justify the spending. Several analysts noted this represents one of the worst tech earnings seasons in recent memory. Microsoft was among the few major tech stocks to rise, closing higher after remaining cash flow positive in the September quarter.

The sell-off spread globally. Japan's tech-heavy Nikkei 225 index fell 2.1 per cent, with Fujitsu plummeting 16.2 per cent and electronics firm Ividen declining 15.2 per cent. SoftBank, an investor in OpenAI, slipped 6 per cent. By contrast, London's FTSE 100 edged up 0.2 per cent, benefiting from its lack of exposure to technology and AI stocks, though millions of British investors with exposure through pensions and investment savings accounts remain affected.

UBS advised clients to diversify beyond AI, noting that whilst the structural growth of AI remains attractive, high expectations and potentially wide differences in company outcomes underscore concentration risks. Futures for the S&P 500 and Dow Jones Industrial Average were down 1.1 per cent and 0.1 per cent respectively on Friday morning.

How it is being reported

• US tech stocks see sharp falls over AI cost concernsShares in Intel have continued to fall while the tech-heavy Nasdaq opens at its lowest level in more than two months.BBC Technology · 30 Oct, 15:01
• Nasdaq plummets 2% as Amazon, Intel and Reddit become latest victims of AI fearsThe Nasdaq plunged 2% Friday as Amazon, Intel and Reddit became the latest stocks to be hit by mounting concerns about AI – putting the tech-heavy index on track for a monthly decline.New York Post · 30 Oct, 14:34
• ‘Tech carnage’: AI stocks plunge as investors spooked by gloomy earningsThe global tech sell-off deepened on Friday after a string of heavily disappointing earnings revived fears over the pace and scale of AI spending. The Nasdaq Composite Index plunged 2.2 per cent at the open on Friday after a $500bn rout in Google-owner Alphabet’s shares on Thursday. Roughly $3 trillion has been wiped off the [...]City AM · 30 Oct, 13:55
• Tech stocks crushed as Nasdaq futures tumble nearly 800 pointsDisappointing earnings reports from Alphabet, Amazon and Intel are renewing fears that the AI trade could unravel.CBS News · 30 Oct, 13:25
• Halloween 'carnage' on Wall Street as AI share price slump sparks fears of stock market crashA Halloween slump in technology stocks has sparked fears of a market crash that would hammer the savings and pensions of millions of British families.This is Money · 30 Oct, 11:05
• Big Tech sheds nearly $900bn in rout over soaring AI spendingCash burn at Google, Amazon and Meta leads Wall Street to question price of AI boomFinancial Times · 30 Oct, 10:00
• Amazon falls 7%, Intel plunges 25% in premarket trading, as pressure mounts after earningsInvestors are nervous about the massive AI spending from the tech giants and whether that will pay off.CNBC · 30 Oct, 08:59
• Global tech rout deepens after US earnings stoke AI spending fearsJapan’s tech-heavy Nikkei 225 index declines, while Wall Street set to open lowerFinancial Times · 30 Oct, 03:14
• US tech stocks set to fall after earnings fuel AI spending concernsNasdaq 100 to open 1.3% down after Google parent Alphabet and Microsoft report lower than expected capexFinancial Times · 29 Oct, 04:48

In this story: Alphabet · Amazon · Intel · Microsoft · Google · Wall Street · Nasdaq · Japan

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