Technology stocks suffered their second consecutive day of heavy losses as investors grew increasingly concerned about the hundreds of billions of dollars companies are pouring into artificial intelligence without yet seeing the financial returns to justify the spending.
Intel's share price fell as much as 30% on Friday, losing more than $130bn in value, after the chip maker revealed it did not expect to bring in more cash than it spent this year and forecast lower-than-expected revenue for the final quarter. The company's finance chief said PC demand was slowing and would likely remain weak through the first half of next year, yet Intel said it would increase spending on AI regardless. Alphabet, Google's owner, continued falling after dropping more than 12% on Thursday, when the company lost over $500bn in market value. The Nasdaq index of major US-listed technology firms sank more than 3.5%.
Other major technology companies reported similar problems. Amazon shares fell as far as 6% overnight after the company revealed it had spent more cash than it made, with spending increasing six-fold over three months. Reddit stock plunged 26% after the social media platform reported weaker-than-expected daily users and warned that Google's AI-driven search was hurting its referral traffic. Roblox, an online game platform, fell nearly 20% as its daily active user numbers dropped. The losses reflect a broader concern that technology firms' massive commitments to artificial intelligence may not generate enough profit to justify their valuations. Meta, Alphabet, Oracle, Amazon and Microsoft have collectively committed to spending $800.6bn on AI in 2026, while Alphabet alone expects to spend up to $205bn this year, almost entirely on AI-related investments.
Analysts describe the situation as "growing pains" for the sector. Chris Low from investment management firm FHN Financial told Reuters the companies were "showing some pretty significant growing pains as they aggressively pursue the AI build-out". Kathleen Brookes, research director at trading firm XTB, said investors had become ruthless about punishing earnings disappointments. "The AI trade has had a good run in recent years, but now investors want payback, and companies like Alphabet and Intel are in the crosshairs," she said. Many analysts have raised questions about whether an AI bubble is forming, with concerns that the cost of building data centres and developing software may ultimately exceed the revenue these investments generate.
Despite the recent turmoil, technology stocks remain substantially higher than a year ago. While the Nasdaq is down 3.5% in Friday trading, it has risen 7.6% over the past 12 months. Amazon has gained nearly 7% over the past year, though Alphabet is down 1.6%. Brookes noted that November typically performs well for stock markets and suggested that continued weakness in AI stocks could signal the end of the AI-driven rally and prompt investors to seek alternative themes.
For UK savers and investors with technology exposure, the sharp falls in major US tech stocks reduce portfolio values and highlight risks from concentrated bets on companies whose high valuations depend on AI investments proving profitable.