Nasdaq tumbles as tech earnings renew doubts about AI spending

The Nasdaq Composite fell 610 points, or 2.3%, in early trading Friday as disappointing earnings from major technology companies intensified concerns that enormous investments in artificial intelligence may take longer than investors expect to pay off.

Intel shares plunged nearly 29% after the opening bell, while Amazon shares fell 7% Friday morning. Alphabet, Google’s parent company, slipped another 1% after its Class A shares lost more than 12% Thursday, their worst day since Google went public in 2004. NBC News reported that Thursday’s decline erased about $500 billion from Alphabet’s market value.

The selloff spread beyond technology stocks. The S&P 500 fell 1.2% after the opening bell, and the Dow Jones Industrial Average declined 0.4%. Before trading began, NBC News reported that the Nasdaq 100 was on course for a drop of more than $1 trillion in market value. The Philadelphia semiconductor index fell 7% in premarket trading, while an exchange-traded fund tracking companies tied to computer memory and storage dropped 6%, according to NBC News.

“This has been one of the worst tech earnings seasons in memory, with underwhelming results from a slew of very prominent companies,” Adam Crisafulli, head of Vital Knowledge, said in a research note cited by CBS News.

At the center of investors’ concern is whether the billions of dollars technology companies are putting into data centers and AI models will produce the returns Wall Street expects. Some investors are also questioning the sustainability of the debt companies are taking on to fund that expansion.

Amazon reported Thursday that spending on its AI buildout had risen faster than expected last quarter, while growth in its core online shopping business slowed. Chief Executive Andy Jassy told shareholders to expect the spending to continue: “We still expect 2026 cash [capital expenditures] of approximately $220 billion, the majority for AWS, and expect to spend meaningfully more in 2027.” NBC News reported that Amazon’s spending had already been set to double from 2025.

Intel told investors its fourth-quarter profit and sales would be lower than expected. Chief Executive Lip-Bu Tan pointed to production and supply problems. “I’m disappointed that we were not able to meet strong customer demand in this quarter,” he said on the company’s earnings call. “We face near-term challenges, including manufacturing, supply shortage, the unprecedented memory crunch and the resulting softness in PC demand.” Citigroup analysts described Intel’s report as “two steps forward, one step back,” according to NBC News.

The retreat in tech shares coincided with a rally in U.S. Treasuries. NBC News reported that the benchmark 10-year Treasury yield fell from just under 5% Thursday to around 4.89% Friday.

Ulrike Hoffmann-Burchardi, an equities executive at UBS, advised clients earlier this week to “diversify beyond AI.” While maintaining a constructive view of AI’s long-term growth, she warned that high expectations and widely varying outcomes among companies create risks for investors concentrated in individual stocks.