Amazon and Intel Earnings Deepen Wall Street’s AI Spending Reckoning

Wall Street’s AI trade suffers its worst setback since June

U.S. stocks endured their sharpest broad-market decline since June on Friday as disappointing results from Amazon and Intel intensified investor concerns over the cost of artificial-intelligence infrastructure and the time required for those investments to produce returns. The Nasdaq Composite fell 2.9%, the S&P 500 dropped 1.8% and the Dow Jones Industrial Average declined 1.1%, according to AP.

The selling extended a technology-led retreat that has pressured equities for several sessions. The S&P 500 closed out a third consecutive losing week, while the Nasdaq 100 fell 3.5% and briefly entered correction territory, Bloomberg reported.

Intel forecast compounds spending concerns

Intel shares plunged 28.6%, their largest decline in more than four decades, after the chipmaker issued a profit forecast below analysts’ expectations. Revenue in Intel’s client-computing group fell 5% to $8.1 billion in the third quarter, according to Seoul Economic Daily.

Amazon also added to the pressure. The company reported third-quarter revenue of $201.94 billion, below the $202.31 billion consensus cited by the London Stock Exchange Group, while earnings per share of $1.89 missed the $1.96 estimate, the publication reported. The results renewed scrutiny of spending on AI development and infrastructure.

The market reaction suggests that investors are focusing less on the scale of AI expenditure and more on whether the spending can translate into adequate returns. Reuters coverage cited by the Economic Times said the latest turbulence followed disappointing quarterly results from Alphabet and Amazon, while Intel shares tumbled after its report.

Energy provides a partial offset

The selloff was concentrated in technology, while energy stocks offered some support. Exxon Mobil rose 2.2% and Chevron gained 1.8% after both oil companies reported stronger summer profits than analysts expected, according to AP.

What to watch

Investors will turn to a heavy slate of corporate earnings, the October employment report and the U.S. midterm-election backdrop in the coming week. The next round of results will be scrutinized for evidence that rising AI investment is translating into revenue and profits, particularly among companies building or financing data-center capacity.