By Salma El-Sakka
US markets tumbled Friday as a sell-off in technology stocks intensified following disappointing earnings reports from several industry giants, erasing nearly $1 trillion in value from the Nasdaq over the past week and about $2 trillion over the past month.
Major Indices Decline
The S&P 500 fell more than 1%, putting it on track to wipe out its gains for October despite having hit an all-time high earlier in the month. The tech-heavy Nasdaq composite dropped more than 3%, while the Dow Jones Industrial Average posted a smaller decline.
Big Tech Earnings Disappoint
Alphabet shares plunged over 12% on Thursday, shedding $500 billion in market capitalization after the company said it burned through more cash in the summer than in the spring due to massive AI infrastructure investments. Amazon fell 1.8% after reporting weaker-than-expected summer profit and disclosing higher-than-anticipated spending for the year. Intel tumbled nearly 30%, its worst day since 1974, despite beating quarterly profit estimates, because its forecast for the final quarter fell far short of expectations.
AI Investment Concerns Mount
Investors are increasingly questioning whether the hundreds of billions of dollars being poured into artificial intelligence by hyperscalers such as Meta Platforms, Alphabet, and Amazon will generate sufficient returns quickly enough. The scrutiny has intensified as these companies raise spending forecasts further to expand AI infrastructure.
Chip Stocks Under Pressure
Nvidia, previously valued at about $5 trillion and seen as a poster child of the AI frenzy, dropped 3.1%, exerting the heaviest drag on the S&P 500. Shares of other semiconductor companies and data-center builders also came under pressure amid concerns that high interest rates may slow the build-out of data centers.
