Amazon and Intel missed on third-quarter earnings, reigniting fears among investors that the AI trade is about to slow.
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Amazon and Intel reignited a sell-off in tech after disappointing investors with Q3 earnings.
Both tech giants said they expected to spend more on AI in 2027, despite negative cash flow.
The Nasdaq 100 shed nearly 3%, putting the index on track for a losing month.
It’s another Friday filled with bruising losses for the tech trade .
The Nasdaq 100 was on track to log a losing week as the sell-off in tech intesified overnight. The losses were sparked by Amazon and Intel , which plunged after hours on Thursday as both tech giants disappointed investors with their third-quarter earnings reports and reignited fears that the AI trade is headed for a slowdown.
Amazon dropped as much as 7% in the early morning as the retail giant reported earnings per share and revenue that came in below expectations for the third quarter. The company also posted a negative cash flow of $7.6 billion for the second-straight quarter, which it said was due to its growing AI spend. CEO Andy Jassy said the firm expected it would continue to “spend meaningfully more” into next year.
Meanwhile, Intel shares cratered as much as 26%. The computer hardware maker beat on earnings and revenue, but issued weak guidance for the fourth quarter, forecasting a slowdown in the PC market that would stretch into at least the first half of 2027. Revenue in Intel’s client computing and physical AI business also dropped 5% year-over-year to $8.1 billion, missing estimates.
The firm maintained its capex guidance, but warned that it likely wouldn’t generate free cash flow in 2027, partly due to capex being “up strongly,” chief financial officer Dave Zinsner said on the call with investors.
Q3 earnings metric Amazon Intel
Earnings per share $1.89 vs. $1.96 expected $0.52 vs. $0.40 expected (adjusted)
Revenue $201.94B vs. $202.31B expected $16.51B vs. $16.50B expected
The results stoked fresh fears for the AI trade, ramping up scrutiny from investors over the finances of major tech players who are worried that AI investment isn’t paying off. The fear is running in both directions: that Big Tech firms are spending too much on AI when the profit potential remains unclear, and that AI investment could soon start to slow, which could spark a series of downstream consequences that will crush suppliers in the industry.
“The AI trade has clearly run into a wall of trouble. We are finally seeing the investor base take out their pencils and draw a dividing line between those who are spending rationally on AI and those who are not,” top economist David Rosenberg wrote in a note Thursday morning.
The major indexes were mixed. Blue chip stocks held stable, though the S&P 500 shed 1% and the Nasdaq 100 fell more than 2%.
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Here’s where US indexes stood shortly after the 9:30 a.m. ET opening bell on Friday:
S&P 500 : 7,623.15, down 1.25%
Dow Jones Industrial Average : 52,201.94, down 0.27% (-140.62 points)
Nasdaq 100 : 28,549.55, down 2.9%
Other chip companies were down sharply, and Neoclouds, one area in particular investors believe would struggle if industry-wide capex were to slow, continued to take it on the chin as investors sought shelter from the rout. SanDisk , notably, was caught amid the broader panic despite its blowout third-quarter earnings report, with the memory company posting 378% revenue growth.
The iShares Semiconductor ETF dropped 6% and remains in a bear market, having fallen 21% from its earlier peak. The Roundhill Neocloud ETF plunged another 7% Friday morning, putting the fund down 42% from its all-time high.
Meanwhile, investors fled to safe havens as tech swooned. The 10-year Treasury yield dropped 7 basis points to 4.92%.
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Here were the most notable moves in the tech trade:
Company Ticker Today’s move
Intel INTC -24%
Sandisk SNDK -9%
AMD AMD -8%
SK Hynix (US-listed ADRs) SKHY -7%
Amazon AMZN -6%
Micron MU -5%
Broadcom AVGO -3%
Nvidia NVDA -3%
Tesla TSLA -2%
Samsung Electronics SSNLF -3%
Sentiment on Wall Street was mixed Friday morning as strategists surveyed the damage over the last month as tech stocks have taken a beating. The Nasdaq 100 is on track to end October in the red, shedding more than 3%.
JPMorgan market intelligence strategists said the rotation away from AI was likely to continue on Friday, thanks to “renewed fears over AI monetization.”
“The AI trade is down, but not out. This is not the first tech and AI correction, and it won’t be the last. We are still in the very early stages of AI development, and pullbacks are par for the course,” Paul Stanley, a managing director at Arca, wrote in a note.
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