Tech stocks crushed as Nasdaq tumbles nearly 1,000 points
Disappointing earnings reports from Alphabet, Amazon and Intel are renewing fears that the AI trade could unravel.
Key points
- The Nasdaq Composite fell more than 970 points, or 3.7%, in afternoon trading on Friday.
- Intel shares dropped over 30% and Alphabet lost roughly $500 billion in market value.
- Bitcoin fell toward $77,000 after hackers believed linked to North Korea stole over $6 billion from Binance.
The Nasdaq Composite Index fell more than 970 points, or 3.7%, in afternoon trading on Friday, as investors pulled back on concerns about the health of the technology sector. Other U.S. markets also declined: the S&P 500 shed 183 points, or 2.4%, and the Dow Jones Industrial Average sank 746 points, or 1.4%.
Intel's stock plunged more than 30%, while Alphabet's Class A shares slid more than 12% on Thursday, their worst day since Google went public in 2004, erasing roughly $500 billion in market value. Nvidia shares dropped 5%.
Earnings and AI spending worries
Market analyst Adam Crisafulli of Vital Knowledge said in a research note that this has been "one of the worst tech earnings seasons in memory," citing underwhelming results from prominent companies. He added that the slump could undermine industry fundamentals by making it harder for companies to raise debt and equity.
Investors are also worried that heavy AI investments will not deliver the payoff Wall Street expects, and about the debt companies are taking on for data center spending. Adam Turnquist of LPL Financial said rising financing costs and elevated AI-related spending have raised concerns over the path to profitability.
This has been one of the worst tech earnings seasons in memory
— Adam Crisafulli
Rate expectations and crypto losses
Expectations that the Federal Reserve may keep raising interest rates also weighed on tech stocks, as higher borrowing costs would make building AI data centers more expensive. The central bank left its benchmark rate unchanged this week, but many economists expect a hike as early as December and into 2027. UBS' Ulrike Hoffmann-Burchardi advised clients to "diversify beyond AI."
U.S. stocks remain only 3.4% below their all-time high. Cryptocurrency prices also slumped after hackers believed to be linked to North Korea stole more than $6 billion from Binance, with bitcoin falling toward $77,000 from more than $86,000 earlier this month.
