US Stock Market Live Updates: Nasdaq crashes over 2%, S&P 1% at open as Amazon, Intel add to AI spending woes
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Dow Jones | Nasdaq | Stock Market Live: Nasdaq drops to a near three-month low as Amazon's rising AI expenditure and Intel's cash burn warning intensify concerns over infrastructure costs and uncertain returns. Chip stocks lead the selloff, while Alphabet extends losses and defensive sectors gain as investors move towards safer assets.
US stocks slide on Friday, with the Nasdaq falling more than 2% to its lowest level in nearly three months as concerns over Big Tech's AI spending weigh on technology shares. Amazon and Intel deepen worries about rising infrastructure costs, while a broad chip selloff adds to market pressure.
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The tech-heavy Nasdaq 100 is on track to shed more than $2 trillion in market value this October, falling over 5.8% as quarterly earnings heighten investor skepticism over massive artificial intelligence expenditures. Concerns over rising capital outlays were amplified by record single-day stock drops for Alphabet following search revenue weakness and Meta's plans for a record $97.5 billion fundraise, alongside fears that elevated borrowing costs will make debt-funded expansion increasingly expensive.
Despite the broader market selloff, revenue across major tech firms remains robust, with strong cloud performance from Microsoft and Amazon Web Services demonstrating ongoing demand for data infrastructure. However, with J.P. Morgan forecasting global AI capital expenditure to reach $900 billion in 2026 alone, the sector's growing reliance on bond issuances and debt financing is sparking fresh caution across both equity and credit markets.
Richmond Federal Reserve President Tom Barkin stated that the direction of US monetary policy remains clear given high inflation, solid demand, and low unemployment, though the pace of future interest rate increases remains open to debate. Speaking on SiriusXM, Barkin noted that a gradual approach to rate hikes allows policymakers time to assess incoming data as businesses face rising cost pressures across energy, labor, and technology investments.
While the Fed held borrowing costs steady this week, new policy language and stronger-than-expected economic data have led investors to anticipate a quarter-point rate increase at the central bank's upcoming December meeting. Barkin emphasized that persistent price pressures and corporate willingness to pass along higher costs could force further policy action to prevent inflation expectations from taking root.
The cost of insuring Intel Corp.'s debt against default surged to an all-time high on Friday after the chipmaker warned it expects to burn cash this year due to a weak personal computer market.
Five-year credit default swaps on Intel debt widened by 17.5 basis points to a record 124.75 basis points, according to Markit data. The surge puts the credit default swaps on track to log their largest single-day jump since October 2022.
Treasury yields slipped even as crude oil prices rebounded, diverging from the typical pattern where higher energy costs fuel inflation expectations and lift yields. Brent crude jumped 2.4% to $113.45 a barrel, remaining near its upper bound since the conflict with Iran intensified energy costs and broader inflationary pressures.
Strategy fell 8.4% despite reporting stronger-than-expected quarterly profits, as investor sentiment was further weighed down by the announcement that its chief financial officer will resign next week for personal reasons.
Coinbase Global dropped 13.3% despite delivering quarterly results that topped Wall Street expectations.
Cryptocurrency stocks plunged as a major security breach at Binance impacted over $6 billion worth of crypto assets. A US blockchain intelligence firm attributed the attack to a North Korean unit, pushing the price of Bitcoin down toward $77,000 from its earlier peak of over $86,000 this month.
Intel tumbled 28.9% and is flirting with its worst day since 1974, even though the chipmaker reported a stronger profit for the latest quarter than analysts expected. It gave a forecast for profit in the final three months of this year that fell far short of analysts’ expectations. CEO Lip-Bu Tan said the personal-computer industry continues to feel pressure, which hurts demand for Intel’s CPUs.
Amazon fell 2% after reporting a weaker profit for the summer than analysts expected. Potentially more concerning for investors was Amazon’s reporting that it burned through $42.4 billion of cash over the prior 12 months, according to a measure called free cash flow. It spent $94.8 billion on property and equipment, primarily through investments in artificial-intelligence technology.
The Nasdaq opened at its lowest level in more than two months on Friday, after Amazon's aggressive AI spending plan and Intel's cash burn warning intensified investor concerns about escalating costs of AI infrastructure buildout and the return timeline.
Read more: Nasdaq plunges 2.3% to over two-month low
Copper prices fell on Friday and were set to log their first monthly decline since June, pressured by a broader retreat in risk appetite following concerns over massive artificial intelligence spending. Benchmark three-month copper on the London Metal Exchange dropped 0.9% to $14,227 a metric ton, setting the metal up for a 1% fall in October as tech sector anxieties and rising oil prices prompted investors to move toward safer assets like bonds.
Despite the monthly decline, near-term supply tightness continues to support prices, with elevated cash premiums and China's Yangshan copper premium remaining near a 13-year high. Supply pressures were further underscored by Rio Tinto pausing underground operations at its Oyu Tolgoi mine in Mongolia due to seismic activity and border transit delays, while tin also slipped to a six-month low on similar AI spending concerns.
- Ipek Ozkardeskaya, senior analyst at Swissquote Bank
Intel saw its stock plunge more than 25% following a warning from the chipmaker that it expects to burn cash this year. The company pointed to a sluggish personal computer market, ongoing manufacturing bottlenecks, and substantial investments required to scale up its production capacity as key drivers behind the financial strain.
Alphabet slipped 0.6%, adding to its losses following a record selloff in the previous session. The decline came after the Google parent company posted disappointing search-advertising results alongside a sharp rise in cash outflows.
Shares of Amazon.com dropped 6.3% in premarket trading following the company's report of a significant cash outflow during the third quarter. The decline was further fueled by management signaling a plan to increase capital expenditure next year, piling onto its already high spending levels.
Despite Friday's decline, the S&P 500 and Nasdaq remained on course for weekly gains, supported by a brief recovery in AI-linked stocks earlier in the week following Anthropic's US IPO filing. However, the Nasdaq was headed for its first monthly decline in three months. Investors also assessed expectations of more than 50 basis points of Fed rate increases by mid-2027. Elsewhere, Chevron and Exxon Mobil gained 1.5% each after beating profit estimates, while Reddit fell 19.5% following a weak user-growth outlook.
The combined spending of Amazon, Alphabet, Microsoft and Meta exceeded $200 billion in the third quarter, according to Ipek Ozkardeskaya, senior analyst at Swissquote Bank. She warned that higher financing costs could absorb a larger share of the cash generated by these companies, leaving less available for expansion and debt repayment. Several companies have turned to bond markets to finance their AI investments, adding to concerns about the sustainability of such spending as borrowing costs rise.
Alphabet slipped another 0.6%, extending its losses following a record selloff in the previous session. Investors remained concerned about disappointing search advertising results and rising cash outflows at the Google parent. The broader semiconductor sector also faced selling pressure, with Nvidia falling 3% and AMD declining 8.7%. Meta also reported cash burn in the September quarter, while Microsoft stood out with a stronger-than-expected cash flow despite raising $25 billion through a debt sale.
Amazon shares dropped 6.3% in premarket trading after the company reported significant cash outflows in the September quarter and signalled another increase in capital expenditure next year. Intel plunged more than 25% after warning that it expects to burn cash this year, citing weak PC demand, manufacturing bottlenecks and heavy investment in expanding production. Together, the two companies risked losing around $300 billion in market value if the declines held.
US stock futures came under sharp selling pressure on Friday, with Nasdaq futures falling 2.41%, as investors reassessed the cost of artificial intelligence investments. Amazon's plans for higher capital expenditure and Intel's warning of cash burn intensified concerns over the scale of spending required to build AI infrastructure and how quickly companies could generate returns. Dow futures rose 0.17%, while S&P 500 futures declined 1.03%.