US technology stocks faced a second consecutive day of sharp declines on Friday, driven by growing investor unease over the massive capital expenditure companies are pouring into artificial intelligence. The tech-heavy Nasdaq index fell by more than 3.5%, marking its lowest level in over two months, as markets reacted to disappointing earnings reports from sector giants.
Intel shares plummeted by as much as 30% during Friday trading, putting the chip maker on track to lose over $130bn in market value.
The company’s financial strain is compounded by weaker demand for computer processors, with finance chief David Zinsner confirming that Intel does not expect to break even on cash flow this year. In its third-quarter earnings report, the firm warned that a slump in PC sales is expected to persist through at least the first half of next year. Despite these headwinds, Intel intends to increase AI-related investment, even as it forecasts lower-than-anticipated fourth-quarter revenue.
Google parent company Alphabet also continued its downward trend, dropping 2.2% in early Friday trading following a massive 12% slide on Thursday that erased more than $500bn (£374bn) in value. The company, which expects to spend up to $205bn this year on investments primarily linked to AI, saw its market confidence shaken after revealing that its new AI-generated search summaries are negatively impacting core advertising revenue.
Broader market anxiety has spread to other industry leaders. Amazon shares dipped about 1.6% on Friday after shedding as much as 6% during overnight trading. The e-commerce giant revealed it has increased spending six-fold over the last three months, with total 2026 commitments reaching $220bn for infrastructure including data centers, servers, and network equipment. Meanwhile, Reddit shares fell by 26% after the company cited Google’s AI-driven search as a factor hurting its traffic, and Roblox shares dropped nearly 20% following a decline in daily active users.
Collectively, major tech players including Meta, Alphabet, Oracle, Microsoft, and Amazon have committed to spending $800.6bn on AI during 2026. This aggressive spending spree has triggered an intense debate among analysts regarding the existence of an AI bubble. Investors are increasingly concerned that the immense costs associated with developing software and building data centers may not be justified by the revenue generated in the near term. The worry is that some tech firms will not be able to justify their sky-high valuations because the cost of building AI data centres and developing the software will end up being greater than the money they can make from it.
Chris Low of FHN Financial observed that the market is struggling with the “growing pains” companies face while aggressively pursuing AI integration. He noted that these signals have led some market observers to speculate that a broader sector slowdown may be on the horizon. He told Reuters the companies were “showing some pretty significant growing pains as they aggressively pursue the AI build-out”. The thinking is that these signs suggest that the entire sector is going to slow down.
Kathleen Brookes, research director at trading firm XTB, described investors as “ruthless” in their current reaction to quarterly results. “The AI trade has had a good run in recent years, but now investors want payback, and companies like Alphabet and Intel are in the crosshairs,” she stated. Brookes cautioned that if the recent poor performance continues, it could indicate the AI trend has peaked, forcing investors to seek new themes to drive market growth, though she noted that November historically remains a strong month for equities.
Despite the current volatility, many of these firms maintain valuations significantly higher than their positions a year ago. While the Nasdaq is currently down 3.5% on the day, it retains a 7.6% gain over the past 12 months. Amazon similarly remains up nearly 7% over the last year, while Alphabet sits 1.6% lower.
