The Nasdaq plunged 2% Friday as Amazon, Intel and Reddit became the latest stocks to be hit by mounting concerns about AI – putting the tech-heavy index on track for a monthly decline.
Tech and AI stocks have suffered choppy trading sessions for weeks as investors bounce between fears of an “AI bubble” and optimism around the new tech. But concerns have grown during the third-quarter earnings season, as companies reveal disappointing revenue and huge spending.
Amazon fell 1.9% Friday after the e-commerce giant reported revenue of $201.9 billion and net income of $20.7 billion – both of which missed Wall Street estimates – and negative free cash flow of $42.4 billion.
The company saw its highest revenue growth in Amazon Web Services, its cloud division, in years, reporting a 39% rise to $46 billion. But it wasn’t enough to squash fears over its massive spending plans, as Amazon reaffirmed its 2026 capex forecast of $220 billion.
Intel plummeted a stunning 29% Friday despite reporting a 21% rise in revenue to $13.7 billion as investors zeroed in on its struggling PC division, a result of the AI and data center boom.
Data center and AI revenue jumped 78% to $7.3 billion. But revenue in Intel’s client computing and physical AI group fell 5% over the year to $8.1 billion in the third quarter, and global PC shipments dropped 4% from a year earlier.
The company said it expects adjusted earnings per share of 25 cents in the current quarter of revenue between $15 billion and $16 billion, missing analysts’ estimates of $17.1 billion.
“We see the PC slowdown continuing at least through the first half of next year,” Chief Financial Officer David Zinsner said, as the business has struggled due to soaring prices and shortages of parts also used in the AI build-out.
Reddit also tumbled a jaw-dropping 24% Friday despite a strong earnings report after its chief executive warned that Google’s AI summaries are hammering its web traffic – triggering a slowdown in user growth rates.
The social-media site, known for its community forums, reported adjusted earnings per share of $1.40, above expectations of $1.33, and a 51% rise in revenue to $895 million, also beating estimates of $874.9 million.
But it was overshadowed by a warning from Reddit CEO Steve Huffman over declining referral traffic from search engines. In the month of October, search traffic dropped by an average of more than 1 million referrals a week, the company said.
The company expects fourth-quarter revenue of $1 billion to $1.03 billion, missing Wall Street estimates of $1.05 billion.
Stocks in the AI memory business like Sandisk, AMD, Broadcom and Nvidia also slumped Friday, falling 8.3%, 8.9%, 4.7% and 2.8%, respectively.
Neocloud stocks – companies that build up troves of computing capacity and lease that power out to other companies – were also hit hard. CoreWeave fell 8.1%, while Nebius dropped 7.4%.
Alphabet shed more than $500 billion from its market cap Thursday – its worst single-day decline ever – after the company revealed that AI chatbot searches are eating into its traditional search engine business, typically one of its most profitable divisions.
Microsoft also fell in Thursday’s trading session after the software giant reported a pullback in AI spending plans, which investors took as a sign that the company isn’t expecting blowout returns from AI investments anytime soon.
The companies extended their losses Friday, as Alphabet fell 1% and Microsoft slumped 1.2%.
The Nasdaq is on track for a 1.5% loss over the week and a 4.6% decline in October.
