Amazon and Intel shares fall as much as 25% on AI spending concerns
Amazon and Intel were set to erase roughly $300 billion in market value between them on Friday, after a quarter of heavy spending on artificial intelligence infrastructure and a warning of continued cash burn sent their shares tumbling in US premarket trading. Amazon fell 7.4% and Intel dropped 25%, with the chipmaker on course to open at its lowest level in about six months if the losses hold through the regular session.
The trigger was cash. Amazon told investors it spent more than $77 billion on property and equipment in the third quarter, above analyst expectations, as it expands data centre capacity for AI services. That left it with a cash burn of $7.6 billion, against cash generation of $14.8 billion in the same quarter a year earlier, and the company has forecast capital expenditure of $220 billion for the year.
Intel's problem is different but just as costly to shareholders. The chipmaker warned it would burn cash this year, citing a weak PC market, manufacturing bottlenecks and heavy spending to expand production. PC chips made up about half of its third-quarter revenue, and Intel expects sales from the segment to fall more than 20% sequentially this quarter, after a 5% decline in the September quarter. It also guided fourth-quarter revenue and profit below Wall Street expectations.
The pain spread across the semiconductor sector, with Nvidia down 2.5%, AMD sliding 7% and Broadcom losing about 4%. The wider concern is that the AI build-out is eating into cash flows that once made Big Tech a byword for easy money. Alphabet and Meta both burned cash in the September quarter, and Microsoft, the exception, joined the borrowing spree with a $25 billion debt sale on Thursday. Alphabet's shares fell 13% in the previous session, their biggest one-day drop since its 2004 listing, after it burned $5.9 billion last quarter and posted negative free cash flow for the first time in 22 years as a public company.
Investors are also watching borrowing costs. The Federal Reserve is expected to raise interest rates by more than 50 basis points by mid-2027, according to LSEG data cited by Token Times, which could make debt-funded AI spending harder to justify. The giants can absorb the outlay, but smaller AI cloud firms borrowing heavily against large order backlogs are drawing closer scrutiny.
