Tech Giants Crater on AI Spending Doubts as Nasdaq Plunges 2%
What’s happening
Alphabet, Amazon, and Intel posted disappointing earnings that triggered a 2% Nasdaq selloff Friday, with Intel plunging 25% and Amazon falling 7% in premarket trading. Investors are now openly questioning whether the massive capital expenditures tech giants are pouring into AI infrastructure will generate sufficient returns to justify valuations.
Market impact
The rout erased hundreds of billions in market cap and signaled a potential unraveling of the AI trade that has driven equity gains since late 2023. Alphabet alone saw a $500 billion stock plunge in its worst day on record, with the parent company losing 13% of value as AI search summaries disappointed users and cloud revenue growth failed to offset investor concerns.
Broader implications
This marks a critical inflection point: the market is no longer granting tech companies unconditional benefit of the doubt on AI capex. With Microsoft simultaneously seeking $25 billion in fresh bond financing as its AI spending bill hits $170 billion, the cost-benefit calculus for the entire sector is now under intense scrutiny.
Sources (3)
The articles Pulse read to write this story- Tech stocks crushed as Nasdaq tumbles more than 600 pointsCBS Money WatchStrong bearish −80
Nasdaq plummets 2% as Amazon, Intel and Reddit become latest victims of AI fearsNew York Post BusinessStrong bearish −83
Amazon falls 7%, Intel plunges 25% in premarket trading, as pressure mounts after earningsCNBC Top StoriesStrong bearish −88
Written by Pulse AI from the articles above. Always check the original reporting before acting on it.