Nasdaq drops 2.9% as Intel and Amazon results cool the AI trade
The Nasdaq fell 2.9% on Friday, its steepest one-day percentage drop since 5 June, after quarterly results from Intel and Amazon disappointed and deepened investor doubts about the returns on corporate spending on artificial intelligence. The tech-heavy index now sits 7.8% below its record closing high of 6 October, and all three main US indices closed lower for the week.
Intel was the session's worst casualty, falling 28.6%, while Amazon trimmed its losses as trading progressed. Chip stocks bore the brunt: Nvidia fell 4.2%, AMD dropped 10.9% and the broader semiconductor index lost 7.2%, taking its monthly decline past 15%. Server makers Dell and HP fell 10.8% and 9.6% respectively.
"It is fair to say that this week, and not just today, has revolved around the future of AI and what it will look like, whether there will be a positive return on investment and, if so, how quickly," said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. "Companies that are performing well and meeting the very high expectations that were set are doing fine," he added. "Those that are falling short and appear not to be hitting the mark or performing as expected are being penalised."
The Dow Jones Industrial Average fell 1.09% to 51,770.31, the S&P 500 lost 1.82% to 7,580.07 and the Nasdaq Composite dropped 2.86% to 25,437.00. The S&P 500 technology sector posted its biggest monthly percentage decline since March 2025, and communication services its worst month since April 2022. The S&P 500 and Nasdaq both ended October lower, while the Dow closed the month with a gain.
With more than half of third-quarter earnings season complete, 299 S&P 500 companies have reported and 82% have beaten consensus expectations, according to LSEG data, which shows analysts now expect S&P 500 earnings growth of 31.6% year on year. Oil majors Exxon Mobil and Chevron beat quarterly profit estimates on wider margins driven by supply disruptions tied to the US and Israeli war against Iran and Russia's war in Ukraine, rising 2.2% and 2.8%. Starbucks fell 1.8% after forecasting lower annual revenue on the disposal of its China business. Crypto-linked stocks Coinbase, Strategy and Robinhood fell between 7.2% and 10.6% after reports that hackers stole $6.3 billion from Binance, the world's largest cryptocurrency exchange.
