AI Investment Fears Spark Major Sell-off: Amazon and Intel Shares Plummet

Investor apprehension regarding the escalating costs associated with artificial intelligence (AI) infrastructure intensified on Friday. This followed disappointing earnings reports from both Amazon and Intel earlier in the week, casting doubt on the long-term viability of the substantial investments fueling the current AI boom.

Amazon's shares experienced a significant decline, dropping over 12 percent after its third-quarter report revealed a cash burn exceeding $42 billion over the 12 months ending in September. This figure is nearly double the company's previous record set in 2022.

Intel's stock fared even worse, falling more than 25 percent and heading towards its most significant single-day drop in over five decades. The chipmaker issued a weak forecast for the fourth quarter and cautioned about a potential slowdown in the personal computer (PC) market.

The broader technology market reflected these concerns, with the tech-heavy Nasdaq Composite falling 2.18 percent in morning trading on Wall Street. The S&P 500 was down 1.15 percent, and the Dow Jones Industrial Average decreased by 205.84 points, or 0.39 percent.

"The broader technology sell-off reflects growing scrutiny of hyperscalers’ spending plans and the debt burden of AI infrastructure providers," noted Vijay Valecha, chief investment officer at Century Financial, in a recent statement.