Tech shares fell for a second day on Friday. Investors are growing uneasy about the huge sums firms are pouring into artificial intelligence. The Nasdaq ended October with its worst monthly drop since March 2025.
Intel dropped 28% on Friday, wiping more than $130bn off its value. Alphabet fell another 1.4% after a 12% plunge a day earlier. Amazon and Reddit also lost ground. The Nasdaq closed 2.8% lower.
Big Spending, Shaky Returns
Meta, Alphabet, Oracle, Amazon and Microsoft have committed about $800bn to AI in 2026. Their earnings have not always matched analysts’ hopes. That has fed fears of an AI bubble.
Analysts worry that building data centres and developing software could cost more than the money AI earns. Some firms may struggle to justify their lofty valuations.
Alphabet Takes a Hit
Alphabet lost more than $500bn (£374bn) in market value on Thursday. The company said its AI summaries, now the top answer to many searches, were hurting core search advertising revenue. It still expects to spend up to $205bn this year, almost all on AI.
Intel, Amazon and Reddit Under Pressure
Intel’s finance chief, David Zinsner, said the company does not expect to generate more cash than it spends this year. He also forecast fourth-quarter revenue below expectations. He said the PC slowdown should last at least through the first half of next year. Even so, Intel plans to raise its spending on AI equipment.
Amazon said it spent more cash than it made, with spending up six-fold in three months. It has committed $220bn this year to data centres, network equipment and servers. Its shares ended Friday down 1.4%.
Reddit sank 29% after reporting weaker daily user numbers. It warned that Google’s AI-driven search was cutting referral traffic. Roblox fell 18% as its daily active users dropped.
What Analysts Say
Chris Low of FHN Financial said the biggest players were showing “growing pains” in their AI build-out. He told Reuters investors fear the whole sector may slow.
Kathleen Brookes of XTB said investors “have turned ruthless”. She said they now want payback on AI bets.
Not All Bad News
Many of these stocks remain above where they stood a year ago. The Nasdaq is up 7.8% over 12 months. Amazon is up nearly 8%, while Alphabet is down 1.3%.
Brookes noted that November is usually a strong month for stocks. She warned that continued weakness in AI shares could signal the trade has peaked.
