Wall Street's AI Hangover Deepens: Nasdaq Sheds 600+ Points on Big Tech Earnings Gloom
Disappointing results from Alphabet, Amazon and Intel reignited fears that the AI spending boom is outrunning its returns, with Intel shares cratering nearly 29%.
Wall Street's AI-fueled rally hit more turbulence Friday as the Nasdaq Composite dropped more than 610 points, or 2.3%, in early trading, with the S&P 500 off 1.2% and the Dow Jones Industrial Average down 0.4% after the opening bell — the latest leg of a selloff triggered by a bruising round of Big Tech earnings.
Intel shares plunged nearly 29% once trading opened Friday after the chipmaker's results disappointed investors already on edge about the pace of AI-related spending. Alphabet's stock absorbed the heaviest blow a day earlier, tumbling more than 12% Thursday — its worst single-day drop since its 2004 IPO as Google — after the search giant beat earnings estimates but raised its capital expenditure outlook, erasing roughly $500 billion in market value in a single session. Amazon's own earnings report also helped fuel the broader retreat, according to CBS News.
"One of the worst tech earnings seasons in memory"
The common thread across the selloff is a swelling unease that the hundreds of billions of dollars hyperscalers are pouring into AI data centers may not pay off as quickly — or as richly — as investors had assumed, and that much of that spending is now being financed with debt.
"THIS HAS BEEN ONE OF THE WORST TECH EARNINGS SEASONS IN MEMORY."
"This has been one of the worst tech earnings seasons in memory," said Adam Crisafulli of Vital Knowledge, citing underwhelming results from several prominent companies. Adam Turnquist of LPL Financial noted that mega-cap stocks have faced growing selling pressure over the past two weeks as AI spending and financing costs rise, even as recent earnings reveal slowing growth in some hyperscalers' core businesses. UBS's Ulrike Hoffmann-Burchardi advised clients to "diversify beyond AI" rather than concentrate portfolios in a handful of single stocks.
Friday's drop extends a rockier stretch for tech names that began in earnest around Oct. 22, when the Nasdaq posted its steepest single-day decline since June on an earlier round of disappointing results. Whether the pullback marks a genuine reassessment of AI valuations or a temporary gut-check ahead of more earnings next week remains, for now, the multi-trillion-dollar question hanging over trading desks.