Intel drops 30% as US tech stocks slide for a second day on AI spending fears

Intel and Alphabet lead a two-day tech rout

US technology stocks fell sharply for a second consecutive session as investors reassessed the enormous sums being committed to artificial intelligence. Chipmaker Intel dropped by as much as 30% on Friday, according to the BBC, while the Nasdaq index of major US tech firms slid more than 3.5%.

The rout followed an even larger single-company loss a day earlier, when Google parent Alphabet saw more than $500bn (£374bn) wiped from its market value. According to the BBC, the slide came after the company disclosed that its own AI-generated summaries were affecting its core search advertising revenue — a sign that AI may be undermining the business that funds it. Alphabet shares slipped a further 1% in early trading on Friday.

Nearly $800bn committed for 2026

The backdrop is a spending surge that has yet to produce a matching payoff in earnings. The BBC reports that Meta, Alphabet, Oracle, Amazon and Microsoft have together committed to $800.6bn of spending in 2026 alone. Alphabet on its own expects to invest up to $205bn this year, almost entirely on AI-related projects.

Intel spends into a PC slowdown

Intel was on track to shed more than $130bn in value on Friday. The company said it plans to increase spending on AI even as demand for computers weakens. Chief financial officer David Zinsner told investors on Thursday that Intel does not expect to bring in more cash than it spends this year, and he forecast fourth-quarter revenue below expectations. In the firm's third-quarter earnings report he warned that the PC slowdown looks set to run "at least through the first half of next year", and said equipment investment had risen sharply in the third quarter and would become "even more significant" in the current one.

Amazon's cash goes out faster than it comes in

Amazon shares fell as much as 6% in overnight trading after earnings missed expectations, before recovering to a decline of about 1.6% on Friday. The company revealed it spent more cash than it generated, with spending rising six-fold over the space of three months. Amazon has committed $220bn for this year, directed at AI data centres, network equipment and servers.

Reddit and Roblox take collateral damage

The sell-off spread beyond the big spenders. Reddit fell 26% after reporting weaker-than-expected daily user numbers and warning that Google's growing AI-driven search is hurting referral traffic to the platform — a concrete instance of AI search reshaping how traffic moves around the web. Gaming platform Roblox dropped nearly 20% on falling daily active user numbers. Microsoft was among several other major firms to report earnings this week.

Analysts see growing pains, not a verdict

Chris Low of FHN Financial told Reuters that the biggest players, such as Amazon and Google, are "showing some pretty significant growing pains as they aggressively pursue the AI build-out", and that the market reads the signs as evidence that "the entire sector is going to slow down".

Kathleen Brookes, research director at trading firm XTB, said investors have "turned ruthless", punishing any disappointment in third-quarter results after years of strong AI-driven returns, and that Alphabet and Intel are now "in the crosshairs". November is historically a strong month for stocks, she noted, so continued weakness in the coming days could suggest the AI trade is past its peak and that investors will start hunting for a new theme to drive markets.

The longer view

As the BBC points out, current prices remain well above where they stood a year ago. The Nasdaq is up 7.6% over the past 12 months despite Friday's fall, Amazon is up nearly 7% over the same period, and Alphabet is down 1.6%.

Why it matters

The episode turns a theoretical question — whether AI infrastructure spending will ever pay for itself — into a concrete market event. Alphabet's disclosure is among the clearest signals yet that AI features can cannibalise existing revenue rather than simply add to it, while Reddit's warning shows how AI-driven search is already redirecting traffic across the web. If investors keep pushing back, the most exposed companies may come under pressure to slow capital expenditure, with knock-on effects for chipmakers, data centre builders and the cloud providers that anchor much of the current tech economy. For the people building on top of this infrastructure, the more immediate question is whether project budgets tighten as finance departments grow more demanding about returns.