Amazon and Intel Stock Plunges Fuel Growing Fears Over AI Investment Costs

United States — Amazon and Intel Stock Plunges Fuel Growing Fears Over AI Investment Costs

US technology stocks faced renewed selling pressure on Friday as investors reconsidered the financial risks associated with the artificial intelligence investment boom.

Nasdaq 100 futures dropped 2.16%, reflecting mounting concerns after Amazon released its latest financial results and Intel warned that it expects to burn cash this year.

Amazon shares declined 7.2% in premarket trading after the company disclosed significant cash outflows in the third quarter and indicated that capital spending would rise again next year.

The announcement intensified questions about the additional funding major technology companies will require to build and maintain infrastructure supporting artificial intelligence.

Intel suffered a steeper selloff, with its shares plunging 25% in premarket trading. The semiconductor company said weaker personal computer demand, manufacturing limitations and expansion-related expenses would contribute to cash consumption this year.

Should the losses persist, Amazon and Intel could see their combined market value shrink by approximately $300 billion.

The developments highlight changing expectations among investors. Shareholders are no longer concentrating solely on the pace of technology expansion. Increasingly, they want to understand the financial burden of these investments and whether companies can eventually generate sufficient returns to justify the spending.

Alphabet also remained under pressure, with its shares slipping 0.9% after suffering a record selloff during the previous trading session. The Google parent had reported weaker-than-expected search advertising results and a substantial increase in cash outflows.

Meta had earlier disclosed cash consumption during the September quarter, while Microsoft raised $25 billion through a debt offering on Thursday.

The weakness spread throughout the semiconductor sector. Nvidia shares dropped 2.5%, AMD declined 7%, and Broadcom fell approximately 4%.

Market concerns were also fueled by the possibility of higher borrowing costs. Technology companies increasingly depending on debt to fund infrastructure projects could encounter greater financial difficulties if interest rates remain elevated.

LSEG data cited by Reuters showed that financial markets expect the Federal Reserve to increase interest rates by more than 50 basis points by mid-2027.

Despite the latest market declines, the S&P 500 and Nasdaq were still positioned to finish the week with gains. However, the Nasdaq was on track for a monthly decline following two consecutive months of advances.

The latest developments indicate that investors are taking a more cautious approach toward technology companies, particularly those making enormous artificial intelligence investments without yet showing comparable financial returns.