Intel plunged 28.6% for its worst drop since 1974 — and the AI sell-off gave the S&P 500 its worst day since June
A drop of 4.2% for Nvidia, the chip company that became the poster child of the AI frenzy, was the heaviest force pulling the S&P 500 downward.
Tech stocks plunged on Friday due to concerns that the market's frenzy around artificial intelligence technology had driven prices too high. The S&P 500 dropped 1.8%, marking its worst day since June, while the Nasdaq composite fell an alarming 2.9% and the Dow Jones Industrial Average declined 1.1%. Intel suffered its worst loss since 1974, plummeting 28.6%.
The stock's downfall followed a profit forecast that fell short of analysts' expectations, as the company's CEO cited ongoing pressure in the personal-computer industry. Despite reporting stronger profits for the latest quarter than anticipated, Intel's stock decline was attributed to the broader tech sell-off fueled by worries about AI.
Amazon followed suit, dropping 1.4% after reporting weaker summer profits and spending $94.8 billion on property and equipment, primarily in AI investments. Alphabet also saw a significant drop, more than 12%, as it reported massive cash burn during the summer to fund AI initiatives. The AI investment worries extend beyond tech companies, with computer chip firms and other winners of the AI frenzy facing pressure due to potential slowdowns from rising interest rates.
Nvidia, the AI sector's poster child, saw its stock drop 4.2%, the most significant contributor to the S&P 500's decline. Meanwhile, cryptocurrency stocks tumbled following a hack on the world's largest crypto exchange, with bitcoin falling below $77,000. In contrast, ExxonMobil and Chevron posted stronger-than-expected summer profits, while Mondelez International and Colgate-Palmolive also beat expectations.
Outside of tech, some stocks rallied after reporting better-than-expected summer profits. The S&P 500 closed the day at 7,580.07, down 140.32 points, while the Dow Jones Industrial Average fell to 51,770.31, and the Nasdaq composite dropped 747.73 points to 25,437.00. Bond market yields eased, signaling investors' shift towards safer U.S. government bonds.
Written by urgent.news from Fortune's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
