TLDR
Wall Street fell sharply on Friday as tech earnings revived doubts about AI spending. Intel lost 28.58 per cent on a weak outlook, the Nasdaq fell 2.86 per cent and the S&P 500 fell 1.82 per cent.
KEY TAKEAWAYS
Intel shares fell 28.58 per cent on Friday, their worst day since 1974, as another round of tech earnings pushed Wall Street into a steep sell-off.[1]
The Nasdaq Composite dropped 2.86 per cent and the S&P 500 fell 1.82 per cent, the worst day for both since June. The Dow Jones Industrial Average lost 572 points, or about 1.1 per cent.[1]
The Nasdaq is now 7.8 per cent below the record it set earlier this month. October was its worst month since March 2025.[1]
A PC slowdown hits Intel
Intel issued weaker guidance for the fourth quarter. It said higher memory chip costs were hurting consumer demand for PCs.[1]
It was the chipmaker's second-worst day on record, though the shares are still up 78 per cent this year.[1]
"A lot of these names, Intel is no exception, they just had a phenomenal year already. So, there's definitely some profit taking as a result," said Mike Dickson, head of research and quantitative strategies at Horizon Investments.[1]
Nvidia fell 4.2 per cent and a closely watched index of chipmakers sank 7.2 per cent.[1]
The bill for AI
Amazon fell 1.4 per cent. Its sales and profit missed analysts' expectations, and it reported negative free cash flow of US$42.4 billion over the past 12 months as it spends more on AI.[1]
Alphabet fell another 1.4 per cent after sinking more than 12 per cent on Thursday, capping its worst month on record.[1]
Alphabet, Microsoft, Meta and Amazon are together spending hundreds of billions of dollars on data centres. Investors now want proof the money will turn into profit.[1]
"We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," Joe Tigay, portfolio manager at Equity Armour Investments, said in a note.[1]
"Investors don't just want capex, they want to see the returns already," said Neil Wilson, a strategist at Saxo Markets.[1]
Microsoft stood apart. It reported US$18.6 billion in positive free cash flow for the quarter, and its shares are just 4 per cent below their record.[1]
Bitcoin fell more than 4 per cent to its lowest level in more than a month after the record hack at crypto exchange Binance.[1]
"The AI trade is down, but not out," said Paul Stanley, managing director at Arca. "This is not the first tech and AI correction, and it won't be the last."[1]
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