Amazon shares fell 7% and Intel shares fell 25% in premarket trading on Friday after both companies reported September-quarter results that disappointed investors. Nasdaq-100 futures were down 2% in early trading.
Amazon reported a third-quarter miss on both the top and bottom lines, according to the report. It kept its 2026 capital expenditure forecast at $220 billion. Amazon also reported negative free cash flow for a second consecutive quarter, a larger shortfall than in the previous period.
Intel issued weaker-than-expected guidance, citing ongoing softness in the PC market.
Chip stocks including Micron, Nvidia and Arm were lower in premarket U.S. trading. European semiconductor names, including ASML, saw sharp declines.
The report says investors are nervous about heavy AI spending by large technology companies and whether it will pay off. Alphabet shares closed 13% lower on Thursday, their worst single-day drop in history, after it also reported ballooning negative free cash flow. Microsoft shares rose after it stayed cash flow positive in the September quarter.
Matt Orton, chief market strategist at Raymond James, told CNBC's "Squawk Box Europe" that he does not see "a moment of reckoning." He said investors should consider how crowded positioning remains across the sector, even though "the fundamentals by and large still remain in place, especially across the AI capex beneficiary part of the market." Orton said he is "generally okay" with these companies turning free cash flow negative because it is a "temporary period."
Despite the recent declines, the Nasdaq Composite was up more than 12% year-to-date as of Thursday's close, according to the report.