US tech stocks fall as AI spending nears $1tn

US tech stocks tumbled for a second consecutive day as concerns grew over the scale of artificial intelligence spending and earnings that fell short of expectations. Shares in Intel fell as much as 30% on Friday, after Alphabet lost more than $500bn in value the previous day, while the Nasdaq dropped more than 3.5%.

Big spenders face investor scrutiny

Major technology companies have ramped up AI spending, with Meta, Alphabet, Oracle, Amazon and Microsoft committing to spending $800.6bn between them in 2026. Alphabet expects to spend up to $205bn this year, almost entirely on AI-related investments, and its stock fell more than 12% on Thursday before dropping a further 2.2% in early Friday trading. Alphabet's value plunged after it said AI summaries now shown at the top of search results were affecting core search advertising revenue.

Amazon shares fell as much as 6% overnight after earnings missed expectations. The company revealed it had spent more cash than it generated and that spending had increased six-fold over three months. Amazon has committed to spending $220bn this year on areas including AI data centres, network equipment and servers. Its shares were still down about 1.6% in Friday trading.

Intel and other tech stocks slide

Intel was on track to lose more than $130bn in value as its shares continued to fall on Friday. The chip maker said it planned to increase AI spending despite weaker demand for computers, a major source of demand for its microprocessors. Chief financial officer David Zinsner said the firm did not expect to bring in more cash than it spent this year and forecast lower-than-expected fourth-quarter revenue. He said the PC slowdown was expected to continue at least through the first half of next year.

Reddit stock fell 26% after weaker-than-expected daily user figures and a warning that Google's growing AI-driven search was hurting referral traffic. Roblox shares fell nearly 20% as daily active user numbers dropped. Several major tech firms reported earnings this week, including Microsoft, and analysts raised questions about the payout from large AI investments.

Analysts warn of growing pains

Chris Low of FHN Financial said much of the market reaction centred on large players such as Amazon and Google. He said the companies were "showing some pretty significant growing pains as they aggressively pursue the AI build-out" and that signs suggested "the entire sector is going to slow down." Kathleen Brookes of XTB said investors had "turned ruthless, punishing any signs of disappointment in [third quarter] earnings." She said the AI trade had a good run in recent years but investors now wanted payback, with companies such as Alphabet and Intel "in the crosshairs."

Despite the declines, many company values remained above levels from a year earlier. The Nasdaq was down 3.5% on Friday but up 7.6% over the last year, while Amazon was up nearly 7% over 12 months and Alphabet was down 1.6%. Brookes noted that November is typically a strong month for stocks and said continued struggles for AI stocks could suggest the trade was past its peak.

Earlier coverage: Intel Q3 revenue rises, but PC decline and supply limits hit shares

Sources: BBC