Nasdaq falls nearly 3% as Intel, Amazon trigger fresh tech sell-off
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The Nasdaq Composite fell nearly 3% on Friday as technology and semiconductor stocks came under heavy selling pressure following a series of quarterly earnings reports that brought the scale of Big Tech’s artificial intelligence spending back into focus.
The index fell 2.86%, its biggest one-day decline since June 5. The S&P 500 fell 1.82%, while the Dow Jones Industrial Average declined 1.09%. The Nasdaq was down 7.8% from its October 6 record close.
Intel sees biggest fall since 1974
Intel was the biggest casualty of the sell-off. Its shares plunged 28.6%, marking the company’s steepest one-day decline since 1974, after its third-quarter results were followed by a weaker outlook for the December quarter.
Intel reported revenue of $16.5 billion for the third quarter, up 21% from a year earlier. Its Data Center and AI business was particularly strong, with revenue rising 78% to $7.3 billion. But the company expects fourth-quarter revenue of $15 billion-$16 billion, compared with $16.5 billion in the September quarter.
Intel also warned that the slowdown in the PC market could continue through at least the first half of 2027.
“Despite near-term headwinds across the PC industry, demand for our CPUs remains robust,” Intel CEO Lip-Bu Tan said. CFO David Zinsner said the company expected the PC slowdown to continue “at least through the first half of next year.”
The fall spread across chip stocks. AMD dropped 10.9%, Nvidia fell 4.2%, while the Philadelphia Semiconductor Index declined 7.2%. Sandisk, which has benefited from the surge in AI-related infrastructure spending, fell about 13%.
Amazon adds to AI spending concerns
Amazon was another major drag on technology stocks after its latest results highlighted the amount being spent on AI and cloud infrastructure.
The company reported third-quarter sales of $201.9 billion, while AWS revenue grew 39%. Amazon is on track to spend about $220 billion in capital expenditure this year, with most of the spending going towards AWS infrastructure.
Amazon CEO Andy Jassy said the company had “even more conviction” that its AWS investments would produce a significantly larger revenue and free-cash-flow business in the coming years. The company also indicated that it expects to spend more in 2027.
The sharp market reaction came despite strong growth in several of the businesses driving the AI buildout. Microsoft, Meta and Alphabet have all reported heavy investment in data centres and computing infrastructure in their latest earnings.
Reddit also plunges as tech stocks retreat
The sell-off was not restricted to semiconductor companies. Reddit shares fell about 29%, while several other technology stocks also declined sharply.
The broader weakness followed a run of earnings from companies at the centre of the AI boom. While many of these companies continue to report strong revenue growth, their results have also shown the enormous amount of capital required to expand AI infrastructure. That has put spending, cash flow and the pace of returns from those investments at the centre of the market’s focus.