Amazon, Intel earnings outlook fuels AI investment skepticism
Nasdaq falls 2.86%; Intel collapses 28.58%
Nvidia, AMD slide drags Philadelphia Semiconductor Index down 7.2%
US stocks tumbled across the board Friday as renewed concerns over the profitability of massive AI infrastructure spending by big tech companies rattled investors. Disappointing earnings and outlooks from Amazon and Intel, following similar results from Alphabet, triggered a broad sell-off centered on technology shares, with semiconductor stocks taking the hardest hit and the Nasdaq Composite falling nearly 3 percent.
Major indexes on the New York Stock Exchange all fell Friday (local time), as negative outlooks following earnings reports from Amazon and Intel — coming on the heels of Alphabet's results — reignited worries about AI infrastructure investment.
The sell-off, concentrated in technology shares, pushed the Nasdaq Composite to its steepest decline of the session.
The Dow Jones Industrial Average closed down 572.25 points, or 1.09 percent, at 51,770.31.
The S&P 500 fell 140.32 points, or 1.82 percent, to 7,580.07, while the Nasdaq Composite dropped 747.73 points, or 2.86 percent, to 25,437.00.
The Nasdaq was down nearly 3.3 percent at one point during trading.
The Nasdaq 100, which tracks large-cap technology stocks, closed 3.46 percent lower, edging toward technical correction territory.
Amazon and Intel's earnings and forward guidance fell short of market expectations, reviving AI investment concerns that had briefly faded from view following Alphabet's results.
Wall Street skepticism is now building in earnest over whether big tech's enormous AI infrastructure outlays will translate into meaningful returns and productivity gains.
"The market has moved past the 'hope and dreams' phase of AI-related investment and has now entered the 'show me' phase, where concrete results need to be demonstrated," said Joe Tigay, portfolio manager at Equity Armor Investments.
Semiconductor stocks bore the brunt of the sell-off.
Intel's share price plunged 28.58 percent, marking the company's worst single-day performance in more than 50 years. The collapse wiped out more than $140 billion in market cap in a single session.
The Philadelphia Semiconductor Index fell 7.20 percent, its largest single-day drop since June 23.
Other major semiconductor names also declined: Nvidia fell 4.22 percent, AMD dropped 10.88 percent, and SK hynix's American depositary receipts slid 7.95 percent.
Cryptocurrency-related stocks also fell across the board following the largest hack in Binance exchange history the previous day. Coinbase dropped 10.62 percent and Robinhood fell 7.21 percent.
Bitcoin slipped below $77,000, reflecting a broad freeze in risk appetite across asset classes.
Oil majors Exxon Mobil and Chevron bucked the trend, however, each posting better-than-expected earnings and hitting all-time highs — Exxon rising 2.16 percent and Chevron gaining 1.75 percent.
Both companies benefited from a surge in refining margins amid energy supply disruptions caused by the war in Ukraine and the US-Iran conflict.
Crude oil prices also rose more than 2 percent on the day, driven by fears of escalation in the Iran conflict.
December Brent crude futures settled at $117.64 per barrel, up 2.40 percent — the highest level since April 29, a six-month peak.
West Texas Intermediate futures closed up 2.08 percent at $104.12 per barrel.
arete@heraldcorp.com
