US tech stocks fell sharply on Friday as investors grew wary of the rising cost of artificial intelligence spending. The Nasdaq opened at its lowest level in more than two months, down 2.5%.
Intel shares fell as much as 30% after the chip maker warned of a weaker PC market, even as it plans to increase AI spending. Finance chief David Zinsner said the firm did not expect to bring in more cash than it spent this year. He also 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.
Amazon shares fell as far as 6% before recovering somewhat. The company's earnings on Thursday fell short of investor expectations. Amazon said its spending had increased six-fold over three months and that it was spending more cash than it was making.
Reddit shares dropped 26% after the platform reported weaker-than-expected daily user figures. Reddit 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 sell-off followed a drop in Alphabet's value of more than $500bn on Thursday. Alphabet revealed that its AI summaries were affecting its core search advertising revenue.
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 market reaction reflected a belief that "the entire sector is going to slow down."