Tech stocks tumble as AI fears collide with earnings misses
Tech-heavy Nasdaq 100 Index falls 3.5%, notching its worst month since March 2025
Tech stocks suffered a steep decline on Friday (Oct 30), marking the second consecutive day of losses, as concerns surrounding artificial intelligence (AI) investments collided with disappointing earnings from major tech companies. The tech-focused Nasdaq 100 Index dropped by 3.5 percent, marking its worst monthly performance since March 2025 and pushing the index into correction territory.
The S&P 500 also fell by 1.8 percent. Investors are becoming increasingly cautious about tech firms grappling with the decline of their traditional businesses, particularly in light of their significant capital expenditure plans. Alphabet and Amazon.com's results further fueled fears that their core segments are being undermined by the very technology they are banking on.
Amazon's shares dropped by 1.4 percent, as investors weighed the company's AI spending plans against its lagging e-commerce business, which fell short of expectations. Alphabet's stock plummeted 13 percent on Wednesday, its largest one-day decline ever, as the search and advertising segment's performance raised concerns about AI's impact on the core business.
Intel experienced its worst single-day drop on record, losing 29 percent, due to a revenue forecast that missed analysts' expectations, which was driven by declining demand for PC processors and supply-chain issues with its data center components. The Philadelphia Semiconductor Index fell by 7.2 percent, dipping below its 200-day moving average for the first time since June 2025.
The recent earnings disappointments have wiped out the Nasdaq 100's gains at the beginning of the week. The market's initial positive reaction to various tech news, such as Anthropic's initial public offering filing, Meta Platforms' capital raise, and SpaceX's AI chip financing deal, has now been overshadowed by fear over the potential negative impact of an AI infrastructure buildout that could lead to free cash flows turning negative and reliance on heavy borrowing.
Analysts are now questioning whether the tech sector's weakness will spill over to the broader market or if the current sell-off will continue.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
