NEW YORK: The Nasdaq fell to its lowest in nearly three months on Friday after Amazon’s aggressive AI spending plans and Intel’s cash-burn warning heightened concerns over soaring AI buildout costs and the timeline for returns.
After paring most of its premarket declines, Amazon.com was down 2 percent. The company reported a sharp cash outflow in the third quarter and signaled another increase in capital expenditure next year.
Intel was set for its steepest one-day drop on record with a near 29 percent slide after the chipmaker said it would burn cash this year due to a weak PC market, manufacturing hurdles and heavy spending to expand production.
The warning sparked a selloff in global chip stocks, with Nvidia down 3.7 percent and AMD sliding about 10 percent. The broader chips index shed 7 percent. Server makers Dell and HP lost 10.4 percent and 8.7 percent, respectively.
Amazon and Intel were set to wipe out near USD200 billion in combined market value, if losses hold, setting up the Nasdaq-100 to erase just over USD1 trillion on Friday. The index is set to shed more than USD2 trillion this month.
“A lot of them kind of got ahead of themselves. It’s all earnings based and right now, they’re not producing,” said Joe Saluzzi, co-manager of trading at Themis Trading.
“Though it’s having a terrible day, Intel is still up significantly this year. It (the decline) doesn’t kill the whole story, it’s pretty much a reset.”
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