US stocks fell sharply on Friday as investors grew worried about the rising cost of the artificial intelligence buildout. The tech-heavy Nasdaq opened down 2.5%, at its lowest level in more than two months.
Intel shares fell as much as 30% in early trading after the chipmaker warned of a weaker computer market while planning to increase AI spending. Finance chief David Zinsner said the firm did not expect to bring in more cash than it spent this year, and forecast lower-than-expected revenue for the fourth quarter. "Looking ahead, we see the PC slowdown continuing at least through the first half of next year," he said in the third-quarter earnings report. The Intel shares were on track to lose more than $130bn in value, according to the report.
Amazon shares fell as far as 6% before recovering, after earnings on Thursday fell short of investor expectations. The company said it was spending more cash than it was making, and that spending had increased six-fold over three months. Its shares were still down about 1.6% in Friday trading.
Reddit stock dropped 26% after the platform reported weaker-than-expected daily user figures. It also warned that Google's growing AI-driven search was hurting referral traffic. Roblox shares fell nearly 20% as its daily active user numbers dropped.
The losses follow a sharp fall in Alphabet, Google's parent company, which lost more than $500bn in value on Thursday. The company said its AI summaries were affecting its core search advertising revenue. Alphabet stock fell a further 1% in early trading on Friday.
Chris Low of FHN Financial told Reuters that the companies were "showing some pretty significant growing pains as they aggressively pursue the AI build-out." He said, "The thinking is that these signs suggest that the entire sector is going to slow down."