US stocks have continued to slide as concerns continue to intensify over the increasing costs of the artificial intelligence (AI) build out.
Shares in Intel continued their overnight slide into early trading on Friday, falling as much as 30% after the chip maker warned of a weaker computer market even as it plans to increase spending on AI.
Amazon shares fell as far as 6% before recovering after its reported earnings on Thursday evening fell short of investors’ expectations.
The tech-heavy Nasdaq stock exchange opened on Friday at its lowest level in more than two months, down 2.5%, as other tech stocks including Reddit and Roblox continued to fall.
The losses follow the value of Google owner Alphabet plunging by more than $500bn on Thursday after it revealed its own AI summaries were affecting its core search advertising revenue.
Alphabet stock continued to fall in early trading, down 1% after Thursday’s massive slide.
The bigger losses on Friday were elsewhere, with Intel on track to lose more than $130bn in value after its earnings update rattled investors.
On Thursday, Intel’s finance chief David Zinsner said the firm did not expect to bring in more cash than it spent this year, and 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 chip maker’s third quarter earnings report.
In the earnings call, he said the firm had significantly ramped up investment in equipment in the third quarter and expected that to be “even more significant” in the following three months.
Amazon on Thursday revealed the company was also spending more cash that it was making, and that spending had increased six-fold over the span of three months.
Shares in Amazon recovered slightly from the overnight fall but were still down about 1.6% in Friday trading.
Reddit stock was down by 26%, after the social media platform revealed weaker-than-expected daily user figures and warned that Google’s growing AI-driven search was hurting referral traffic.
Stock in online game platform Roblox also fell, down by nearly 20%, as its daily active user numbers dropped.
Several major tech firms have reported earnings this week, including Microsoft, and analysts said there were questions about the payout from the huge investments in AI.
Chris Low, from investment management firm FHN Financial, said the bulk of what was happening in the stock market was in reaction to some of the biggest tech players such as Amazon and Google.
He told Reuters 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.”
