Technology shares recorded a decline for the second consecutive day as concerns mount over the hundreds of billions of dollars companies are investing in artificial intelligence. The Nasdaq index of the largest US-listed technology companies fell by more than 3.5 per cent.
Intel shares plunged by as much as 30 per cent on Friday, with the company on track to lose more than $130bn in value. The chipmaker announced it plans to increase spending on artificial intelligence despite weaker demand for computers, which are the primary source of demand for its microprocessors. Intel’s financial director, David Zinsner, stated on Thursday that the company does not expect a significant influx of cash from spending this year and forecast lower-than-expected revenues for the fourth quarter. “Looking ahead, we see the slowdown in the personal computer market continuing at least into the first half of next year,” Zinsner said. He added that the company had significantly increased equipment investment in the third quarter and expects it to be “even more significant” in the next three months.
Shares of Alphabet, the owner of Google, fell by more than $500bn, or £374bn, in the previous trading session. The drop followed the company’s announcement that AI summaries, which it now offers as the first response to search queries, are impacting its core search advertising revenue. Alphabet expects to spend up to $205bn on investments this year, almost exclusively linked to artificial intelligence. The share continued to fall in early trading, losing a further 2.2 per cent after dropping more than 12 per cent on Thursday.
Other technology shares also declined, including Reddit and Amazon. Amazon shares fell as much as 6 per cent in overnight trading after its business results disappointed investor expectations. The company announced on Thursday that it had also spent more money than it earned and that spending had quadrupled over a three-month period. Amazon has committed to spending $220bn this year, directing funds into investments such as AI data centres, network equipment and servers. Shares recovered slightly from the overnight drop but remained about 1.6 per cent lower on Friday.
Reddit shares fell 26 per cent after the social platform reported daily user figures below expectations and warned that Google’s growing AI-driven search is harming traffic coming through recommendations. Shares of online gaming platform Roblox also fell, by nearly 20 per cent, as its daily active user numbers declined. Several major technology companies released their business results this week, including Microsoft.
Chris Low of investment firm FHN Financial told Reuters that much of what is happening in the stock market is a reaction to some of the biggest technology players, such as Amazon and Google. “They are showing quite significant growing pains as they aggressively build out AI infrastructure,” Low said. He added: “The thinking is that these signs indicate the entire sector will slow down.”
Kathleen Brookes, research director at trading firm XTB, stated that AI-related trading has seen many ups and downs in recent months. “Investors have become ruthless and are punishing every sign of disappointment in third-quarter results,” Brookes said. “AI-related trading has had a good run in recent years, but now investors want a return, and companies like Alphabet and Intel are in the crosshairs.” She also noted that November is usually a strong month for shares. “If we see AI shares continue to struggle over the next few days, it could indicate that the AI-related trade has peaked and investors will look for a new theme to drive markets,” Brookes said.
Major technology companies have significantly increased spending on artificial intelligence, with Meta, Alphabet, Oracle, Amazon and Microsoft collectively committing to spend $800.6bn in 2026. Although the Nasdaq fell 3.5 per cent on Friday, it has risen 7.6 per cent over the past year. Amazon has grown by almost 7 per cent in the last 12 months, while Alphabet has fallen 1.6 per cent.
