AI spending fears pushed US technology stocks sharply lower on Friday, October 30, as investors examined the vast sums flowing into data centres, chips and computing equipment and asked the rather traditional question of when they might see a return.
By 11:48 a.m. Eastern, the technology-heavy Nasdaq Composite was down 2.5%, according to the Associated Press. The S&P 500 had fallen 1.6%, putting its gain for October at risk. Definitive closing figures were not yet available in later reporting.
Intel and Amazon led the second day of selling, following Alphabet’s record 12.6% decline on Thursday. The Google parent lost more than $500 billion in market value after its results raised concerns that AI-generated search answers were weakening the advertising business that finances much of the company’s expansion.
Cash flow becomes the awkward part
Amazon shares fell as much as 6% before recovering most of the decline, trading around 1.6% lower later on Friday. Its earnings disappointed investors, but the larger concern was spending.
The company’s trailing 12-month free cash flow swung from positive $14.8 billion to negative $42.4 billion, according to figures reported by the Associated Press and Axios. Amazon expects capital expenditure of roughly $220 billion in 2026, as it expands the infrastructure supporting artificial intelligence and its cloud business.
Alphabet faces a similar imbalance. It expects about $200 billion in capital spending this year, more than double the previous year’s total, while recording negative free cash flow of $9.1 billion in the latest quarter. Google Cloud revenue more than doubled, showing that demand is hardly absent. The issue is that booming demand and booming profits are not always the same thing, despite their frequent proximity in corporate presentations.
Dave Wagner of Aptus Capital Advisors said investors needed evidence that artificial intelligence was adding to Google search rather than cannibalising it. Alphabet shares slipped another 1% in early Friday trading after Thursday’s historic fall.
Intel’s problems extend beyond AI
Intel shares dropped as much as 30%, putting the chipmaker on course to lose more than $130 billion in market value. Chief Financial Officer David Zinsner said Intel did not expect to generate more cash than it spent this year and forecast weaker-than-expected fourth-quarter revenue.
The company also substantially increased equipment investment during the third quarter and expects spending to rise further in the final three months of the year. Zinsner warned that the slowdown in personal computers would continue through at least the first half of 2027.
Still, Intel’s decline cannot be explained by AI expenditure alone. Reuters cited expensive memory, manufacturing constraints, substrate shortages and an explosion-related shutdown at an Israeli factory among the pressures on the business.
There were also signs of genuine growth. Third-quarter revenue rose 21% to $16.5 billion, beating Intel’s own guidance, while the company recorded its strongest data-centre revenue growth in 15 years. Investors evidently decided the encouraging numbers could wait outside while the cash-flow warning took the main seat.
AI search is also reshaping web traffic
Reddit shares fell 26% after management warned that fourth-quarter daily users could decline by a low-double-digit percentage because Google’s AI products were reducing referral traffic. That drop came despite Reddit beating third-quarter earnings and revenue estimates, with advertising revenue rising 54%.
The distinction matters. Reddit’s results were not simply weak. Investors were reacting to the possibility that AI-generated answers could keep more users inside Google, reducing visits and advertising opportunities for platforms and publishers that depend on search referrals.
Roblox stock also fell nearly 20%. Its 138 million daily active users represented a 9% decline from a year earlier but a 12% increase from the previous quarter, making the direction of travel depend heavily on which comparison investors preferred.
Chris Low of FHN Financial told Reuters that Amazon and Google were showing “some pretty significant growing pains as they aggressively pursue the AI build-out”. He said investors feared those warning signs could indicate a broader slowdown across the technology sector.
For now, cloud demand remains strong and several companies are still reporting revenue growth. Wall Street’s concern is more specific: the infrastructure bill has arrived, while clear evidence of proportionate returns remains noticeably less punctual.
