US stocks fell sharply on Friday as investors grew wary of the cost of building out artificial intelligence. The tech-heavy Nasdaq opened at its lowest level in more than two months, down 2.5%.
Intel shares fell as much as 30% in early trading. The chip maker warned of a weaker computer market even as it plans to increase AI spending. Its finance chief, David Zinsner, said the firm did not expect to bring in more cash than it spent this year. He also forecast lower-than-expected revenue for the fourth quarter. "Looking ahead, we see the PC slowdown continuing at least through the first half of next year," he said.
Amazon shares fell as far as 6% before recovering. The company's earnings on Thursday fell short of investor expectations. Amazon also said its spending had increased six-fold over three months and exceeded the cash it was making.
Reddit stock dropped 26%. The social media platform reported weaker-than-expected daily user figures and said Google's growing AI-driven search was hurting referral traffic. Roblox shares fell nearly 20% after its daily active user numbers dropped.
The sell-off followed Alphabet's loss of more than $500bn in value on Thursday. Alphabet said its AI summaries were affecting its core search advertising revenue.
Chris Low of FHN Financial told Reuters that the largest tech companies were "showing some pretty significant growing pains as they aggressively pursue the AI build-out." He said the thinking among investors is that "these signs suggest that the entire sector is going to slow down."