Nasdaq sinks more than two percent as Intel shares fall nearly 30%
Intel shares fell nearly 30% in early trading on Friday and the tech-focused Nasdaq sank more than two percent, as a run of disappointing earnings forced investors to confront how much return the multi-trillion dollar artificial intelligence buildout will actually deliver.
About 20 minutes into the session, the Nasdaq Composite stood at 25,598.02, the broad S&P 500 was down 1.2% at 7,626.19 and the Dow Jones Industrial Average had slipped 0.3% to 52,180.95. Amazon lost 1.8%, adding to earlier declines by Meta and Google parent Alphabet after their own results.
"The bulk of what's happening in the stock market is in reaction to tech earnings, and particularly some of the biggest players in the sector," Chris Low of FHN Financial said. Enthusiasm about AI infrastructure spending has propped up equities for the past couple of years, alongside optimism that the technology will lift productivity growth.
That support is now being tested. Investors have grown louder in questioning the payoff from the costly capital programmes launched by Amazon, Google and other giants, and in raising concerns about how those plans are financed and what they mean for jobs.
The companies are "showing some pretty significant growing pains as they aggressively pursue the AI build-out", Low said, adding: "The thinking is that these signs that suggest that the entire sector is going to slow down."
