Intel, Google, and Amazon lead stocks slump as tech giants get an AI wake-up call

Chipmaker Intel slid 30%, the most in over four decades, as its outlook missed estimates. Amazon fell 2.3% on greater capital spending. 

Wall Street got a reality check as a bruising selloff in technology shares fuelled concern the artificial intelligence (AI) frenzy that has powered the equity bull market might be overblown.

A batch of disappointing tech results drove the Nasdaq 100 down 3.5%. Chipmaker Intel slid 30%, the most in over four decades, as its outlook missed estimates. Amazon fell 2.3% on greater capital spending. Blackstone said Anthropic may not receive an investment-grade rating immediately after its IPO, according to the Financial Times.

The S&P 500 sank about 2%, breaching its 100-day moving average.

Bitcoin slid to around $77,000 as Binance revealed a record hack that renewed questions about the security of customer assets. Oil rose on worries the US may resume strikes against Iran. Higher energy costs reduced the bid for Treasuries, but the market was set for the best month since February 2025.

The market reacted similarly to Alphabet’s results on Wednesday. The Google parent reported search and advertising sales that reinforced investor concerns about AI’s threat to its core business, sending its shares down 13% at the close Thursday, the biggest drop ever for the stock.

The core businesses of America’s technology giants, the advertising, consumer and retail machines propping up a collective $750bn in AI spending this year, are starting to show signs of slowing. In some cases, they’re being cannibalised by the very technology the firms are betting the house on.

That has sharpened scrutiny of both the durability of AI demand and whether the huge sums being poured into the technology will generate sufficient returns. The Nasdaq 100 has wiped out more than $1.2 trillion in market capitalisation in October.

The spreading weakness in the core businesses of tech giants means the big payoff that everyone has been saying will come eventually is getting pushed even further down the road, according to Matt Maley at Miller Tabak. “It raises the question as to whether the payout will be as big as they have been promising,” he added.

Maley also noted that the biggest problem investors will face in the coming weeks is that the “rotation” that has held up the US stock market could easily disappear.

“If the major averages begin to drop in a more compelling manner, it is very likely that investors will stop rotating into other sectors and start rotating into cash,” he said. “This is especially true since they have been hearing about a bubble for over a year now.” While AI demand remains robust, there’s a rising risk of mid-cycle capital expenditures indigestion, according to Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.

“We continue to see scope for equity gains overall and believe investors should focus on building a resilient portfolio that includes exposure beyond tech,” she said.

The disappointing results mean Europe is gaining ground on the US this reporting season, with profit growth forecast within touching distance for the first time in more than three years.

Analysts expect MSCI Europe constituents to post a 23% surge in third-quarter profits versus a year earlier, just shy of the 24% increase forecast for S&P 500 firms, according to data compiled by Bloomberg Intelligence. The last time European earnings outshone US counterparts was in the first quarter of 2023.

• Bloomberg