- Intel shares dropped 26.87% after weak PC market guidance in Q3 earnings
- Amazon shares fell 1.96% due to missed revenue and earnings expectations
- Tech stocks including Micron, Nvidia, and Arm declined in premarket trading
Wall Street's technology stocks came under renewed pressure on Friday as Intel and Amazon shares tumbled following their September-quarter earnings reports, intensifying concerns over the massive investments technology giants are making in artificial intelligence (AI).
Intel shares plunged 26.87% to $67.34 in morning trading, putting the chipmaker on track for its worst single-day performance since 1974. The steep decline followed weaker-than-expected guidance from the company, which pointed to continued softness in the personal computer (PC) market.
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Amazon shares also declined, falling 1.96% to $239.02, after the e-commerce and cloud computing giant reported September-quarter results that missed analyst expectations on both revenue and earnings. Investors were particularly concerned about its cash flow position and continued commitment to heavy capital expenditure.
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The company maintained its capital expenditure outlook of $220 billion for 2026. It also reported negative free cash flow for the second consecutive quarter, with the deficit widening significantly from the previous quarter.
The sell-off extended beyond the two companies, with semiconductor stocks including Micron, Nvidia and Arm trading lower in premarket activity. Major European chipmakers, including ASML, also witnessed sharp declines, reflecting broader concerns across the technology sector.
The weakness in technology stocks dragged the Nasdaq Composite down more than 2% in morning trading, putting the index at risk of ending the week in negative territory. Despite the latest correction, the Nasdaq remained up more than 12% year-to-date through Thursday's close.
The pressure follows another bruising session for technology stocks on Thursday, when Alphabet shares plunged 13%, their biggest single-day decline on record, after the company reported a sharp deterioration in free cash flow amid rising AI-related investments.
Microsoft, however, bucked the trend, with its shares rising after the company remained free cash flow positive in the September quarter.
The latest market reaction highlights growing investor scrutiny of the enormous sums technology companies are committing to AI infrastructure, particularly whether the investments will generate returns quickly enough to justify the spending.
CNBC reported that Matt Orton, chief market strategist at Raymond James, said the sell-off did not necessarily signal a fundamental turning point for the technology sector.
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He cautioned, however, that investors should reassess crowded positioning in technology stocks, even as underlying business fundamentals remain strong.
Orton said the near-term market reaction could be painful but argued that the broader fundamentals, particularly for companies benefiting from AI-related capital expenditure, remained largely intact.
He also said he was generally comfortable with companies reporting negative free cash flow for a temporary period, provided the spending was directed towards long-term growth opportunities.
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