Tech stocks fell for a second straight day on Friday as investors grew wary of the hundreds of billions of dollars companies are spending on artificial intelligence.
Intel shares dropped 28% on Friday. Alphabet, Google's owner, fell a further 1.4% after a 12% plunge on Thursday. Reddit shares fell 29%, and Amazon also declined. The Nasdaq index of the largest US-listed tech firms recorded its worst monthly slide since March 2025 at the end of October.
Alphabet's stock lost more than $500bn in market value on Thursday, after the company said its AI-generated summaries, now the top answer to many search queries, were hurting its core search advertising revenue. Alphabet expects to spend up to $205bn this year, almost entirely on AI.
Intel said it planned to increase AI spending despite weaker demand for computers. Its finance chief, David Zinsner, said the company 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 in the chip maker's third quarter earnings report.
Amazon said its spending had increased sixfold over three months and that it had spent more cash than it made. The company has committed $220bn this year to investments including AI data centres, network equipment and servers. Its shares ended Friday down 1.4%.
Reddit reported weaker-than-expected daily user figures and warned that Google's AI-driven search was reducing referral traffic. Roblox shares fell 18% after its daily active user numbers dropped.
Major tech firms, including Meta, Alphabet, Oracle, Amazon and Microsoft, have committed to spending $800bn between them in 2026.
Chris Low of FHN Financial told Reuters that the companies were "showing some pretty significant growing pains as they aggressively pursue the AI build-out." He said the market reaction reflected concern that the sector would slow.
Kathleen Brookes, research director at XTB, said: "Investors have turned ruthless, punishing any signs of disappointment in [third quarter] earnings."
Stock values for many of these companies remain above year-ago levels. The Nasdaq closed 2.8% lower on Friday but is up 7.8% over the past year. Amazon is up nearly 8% over 12 months, while Alphabet is down 1.3%.