The day of selling
US stock markets continued their slide as fears intensify over the rising costs associated with building artificial intelligence infrastructure. According to the BBC, the Nasdaq, a heavily technology-weighted index, opened down 2.5% on Friday, at its lowest levels in more than two months, and the decline also affected Reddit and Roblox.
The most striking move concerns Intel: the stock fell by as much as 30% after the company warned of a weaker computer market, despite plans to increase AI spending. The BBC writes that the company could lose more than $130 billion in value. Amazon, for its part, fell by as much as 6% before recovering, after quarterly results that fell short of investors' expectations.
The causes of the decline
The sell-off comes after Alphabet, the company that controls Google, saw its value fall by more than $500 billion on Thursday: the company disclosed that its AI-generated summaries are weighing on revenue from search-related advertising. The stock then extended its decline, losing another percentage point in early trading on Friday.
On the Intel front, Chief Financial Officer David Zinsner said, according to the BBC, that the company does not expect to take in more than it will spend this year and forecast fourth-quarter revenue below expectations. He also indicated that the PC market slowdown should continue at least through the first half of next year, while equipment investments, already increased in the third quarter, will be even more substantial in the following three months. Reddit fell 26% after reporting daily user figures below expectations and signaling that Google's AI-enhanced search is hurting inbound traffic. Roblox retreated by nearly 20% due to a decline in daily active users.
What remains to be verified
Several major technology companies, including Microsoft, reported results this week; according to analysts cited by the BBC, doubts remain about the returns on massive AI investments. Chris Low of FHN Financial spoke of "growing pains" as companies pursue AI development, adding that these signals would stoke fears of a slowdown across the entire sector. These are, however, assessments, not definitive data.
The material does not clarify the overall scale of market losses or the performance of the other companies cited, and does not provide details on Microsoft's results. The evolution of AI costs and their actual impact on financial statements in the coming quarters therefore remain to be verified.
