Tech Selloff Deepens as Alphabet, Amazon and Intel Fuel AI Spending Fears

Alphabet's earnings brought two investor concerns together: the cost of building AI infrastructure and the revenue generated by AI-powered search. Its shares fell 12.6% after the company reported 25% revenue growth but quarterly infrastructure spending exceeding $51 billion, according to The Hindu.

Google Search revenue missed analysts' expectations, News18 reported. Lower advertising revenue from AI-powered Search queries added to the concerns, according to The Hindu. Strong overall growth was not enough to reassure investors about the spending bill.

On October 29, Alphabet shares lost about 13%, wiping roughly $500 billion from its market value, according to Il Post. The decline put the economics of AI investment at the centre of the technology selloff.

Intel's outlook added a separate source of pressure. On October 29, the Financial Times reported a 22% share decline after the chipmaker forecast weaker than expected PC chip sales and falling margins. AI demand was supporting its data centre business, but weak PC demand and supply shortages weighed on its revenue outlook, according to Business Line.

Amazon then disappointed investors with modest cloud results and weak advertising growth, MarketWatch reported. Its $42.4 billion cash burn added to the pressure: only one of four AI hyperscalers reported positive free cash flow in this earnings round, according to Gizmodo.

By October 30, the selling had spread. Asian markets closed mostly lower following Wall Street's losses, Notícias ao Minuto reported. In the US, the technology-heavy Nasdaq opened at its lowest level in more than two months, according to BBC News.

Friday's session ended with the S&P 500 down 1.8%, its worst day since June, according to the South China Morning Post. The losses capped a third week of declines as investors retreated from the AI trade, Bloomberg reported.

The latest October 31 account from Business Line put the Nasdaq 100's decline at about 3% and Intel's fall at 28%. Earlier reports gave different Intel declines at different trading stages, including a drop of more than 27% in premarket trading reported by Quartz.

The spending commitments remain enormous. Alphabet, Amazon, Meta and Microsoft plan more than $740 billion in capital projects this year, largely for AI infrastructure, according to TechCrunch. Its reporting describes growing investor worries about debt and whether those investments will pay off.

AMD's earnings offer a concrete next test for chip investors. MarketWatch reported that investors would soon learn how far AMD shares Intel's problems with weak PC demand and constraints on AI server chip production.

For the biggest infrastructure buyers, the unresolved issue is whether spending translates into cash generation quickly enough. Google's search advertising performance, Amazon's cloud results and companies' capital spending plans are central to that question, based on reporting from The Hindu, MarketWatch and TechCrunch.