Tech stocks tumble as AI fears collide with earnings misses

[NEW YORK] Tech stocks plunged on Friday (Oct 30) for the second day in a row as fears around artificial intelligence spending collide with disappointing earnings in big tech’s core businesses.

The tech-heavy Nasdaq 100 Index fell 3.5 per cent, notching its worst month since March 2025, after falling as much as 4.5 per cent into correction territory. The S&P 500 fell 1.8 per cent.

Investors are showing waning tolerance for tech companies that are seeing their legacy businesses falter, especially given their massive capital expenditure plans. Alphabet and Amazon.com’s results spiked fears that those core segments are being cannibalised by the very technology the firms are betting the house on.

Amazon shares slumped 1.4 per cent, as the company’s AI spending plans and lagging e-commerce business overshadowed solid growth in cloud sales in the eyes of investors after it reported earnings on Thursday. The results dragged all of the Magnificent 7 lower.

The market reacted similarly to Alphabet’s results on Wednesday. The Google parent reported search and advertising sales that reinforced investor concerns about AI’s threat to its core business, sending its shares down 13 per cent at the close Thursday – the biggest drop ever for the stock – while the Nasdaq 100 fell 1.4 per cent.

“The weakness in their core businesses is a new wrinkle in the debate about whether the return on investment on AI is going to come quickly enough to justify euphoria surrounding this technology,” said Matt Maley, chief market strategist at Miller Tabak & Co.

Meanwhile, Intel saw its worst one-day drop on record after the chipmaker reported a revenue forecast that missed analysts’ estimates, hurt by sputtering demand for PC processors and supply-chain problems with its lucrative data centre components. Shares fell 29 per cent.

Intel’s rivals Advanced Micro Devices and Nvidia were down 11 per cent and 4.2 per cent, respectively, while Dell Technologies, which makes PCs, fell 11 per cent. The Philadelphia Semiconductor Index fell 7.2 per cent, plunging below its 200-day moving average for the first time since June 2025.

Overall, the recent results have erased the Nasdaq 100’s gains at the beginning of this week. The market had initially reacted positively to a slew of big tech news, including Anthropic’s highly anticipated initial public offering filing, Meta Platforms’ more than US$95 billion capital raise, and SpaceX’s US$40 billion equipment-finance lease to pay for AI chip purchases.

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All that rosiness has now turned to fear as the market assesses if it can stomach an AI infrastructure buildout that is turning free cashflows negative and that relies on heavy borrowing. 

“The bigger question that still remains is will the weakness in tech spillover to the broad market, or can the game of musical chairs continue?” Jonathan Krinsky, chief market technician at BTIG, wrote in a note. “A correlation-one style selloff continues to be elusive, but the set-up for it into November is now more likely, in our view.”

For now, investors are looking towards other parts of the market. The S&P 500 Equal Weight Index gained 1.2 per cent on Thursday, while around 400 stocks in the benchmark index were positive.

In fact, every sector in the S&P 500 is in the green this month except for communication services and information technology, and October was the best month for consumer staples since October 2000. 

But tech’s heavy weighting in both the S&P 500 and Nasdaq 100 could start to erode them, especially in the face of uncertainty surrounding the midterm elections next week.

“If the major averages start to fall, investors will likely start to rotate towards cash instead of other sectors, especially with all of the ‘bubble’ talk they’ve heard over the past year,” Maley said.

Other areas of tech are being punished, too. Roblox shares fell 18 per cent after reporting daily active users that came in below estimates, and Reddit shares slumped 29 per cent in the worst drop on record after announcing plans to limit access to its online user forums to users with accounts.

Outside of tech, ExxonMobil reported earnings before the bell on Friday that surpassed expectations on the strength of surging gasoline and diesel prices that pushed refining results to an all-time high. The shares gained 2.2 per cent. Chevron also beat expectations, sending shares up 1.8 per cent. BLOOMBERG