US equities opened sharply lower on Friday, with the Nasdaq Composite tumbling 2.44% as disappointing results from Amazon and a downbeat forecast from Intel intensified investor concerns about the escalating costs of artificial intelligence infrastructure and the timeline for generating returns on those investments. The S&P 500 fell 1.3%, while the Dow Jones Industrial Average shed 175 points.
Friday marked the final trading session of October, and the Nasdaq was on track to end the month lower despite gains in the broader market. The tech-heavy index was heading for a decline of approximately 2.5% for the month, potentially snapping its two-month winning streak. In contrast, the S&P 500 was poised to gain 0.9% and the Dow was set to rise 2.8%.
Amazon and Intel Lead Tech Selloff
Amazon shares dropped around 4.4% after the e-commerce and cloud giant reported third-quarter revenue and earnings that missed Wall Street expectations. The company also posted negative free cash flow of $42.4 billion over the trailing 12 months, compared with positive cash flow of $14.8 billion in the year-earlier period. Amazon maintained its capital expenditure forecast of approximately $220 billion for 2026, amplifying concerns about the scale of its AI infrastructure investments and the pressure on cash generation.
Intel shares plunged more than 29% after the chipmaker issued a weaker-than-expected outlook for the current quarter. The company is grappling with a slowing personal computer market, manufacturing bottlenecks, and heavy investment to expand production capacity. Intel's client computing revenue declined 5% year over year to $8.1 billion in the third quarter, reflecting pressure in the PC market.
Other semiconductor and hardware stocks also came under pressure. Advanced Micro Devices fell 9%, Nvidia declined 3.3%, and server makers Dell and HP lost 8.3% and 5.6%, respectively. SanDisk shares dropped 7% despite quarterly results that exceeded estimates.
AI Investment Costs Weigh on Market Sentiment
The selloff reflects growing scrutiny of the spending required to build AI data centers and expand computing capacity. Investors are increasingly assessing whether the expected returns from these investments will justify the substantial capital commitments. Alphabet shares slipped around 1% in trading after plunging 12% on Thursday, following disappointing results in its search advertising business and negative free cash flow of $9.07 billion in the third quarter.
Meta also reported cash outflows during the September quarter, while Microsoft delivered a stronger-than-expected cash flow result despite raising $25 billion through a bond sale. Concerns have also spread to companies providing AI infrastructure. CoreWeave shares have fallen around 36% in October, while Nebius is heading for a monthly decline of approximately 32%, as investors assess debt levels and financing costs across the sector.
Meanwhile, defensive names such as Procter & Gamble, Walmart, and Coca-Cola gained around 2% in trading, alongside healthcare stocks.
Nasdaq Heads for Monthly Decline
Despite the latest losses, the S&P 500 and Nasdaq were still on course for weekly gains, following a brief recovery in technology stocks earlier in the week after Anthropic unveiled its US initial public offering filing. However, the Nasdaq Composite was heading for a decline of approximately 2.5% for October, potentially ending its two-month winning streak. Nine of the 11 S&P 500 sectors were expected to record monthly gains, with technology and communication services among the exceptions. Communication services was heading for its worst month since April 2022.
Investors were also monitoring interest-rate expectations. Markets were pricing in more than 50 basis points of Federal Reserve rate increases by mid-2027, according to LSEG data, despite the central bank holding rates steady earlier in the week.
This article is for informational purposes only and does not constitute financial advice.
