Tech Sell-Off Pushes Nasdaq Down More Than 3%
Intel plunged nearly 30% and Nvidia fell 3.1% on Friday. The Nasdaq has lost nearly $1tn in a week as investors question AI spending.
Technology shares led Wall Street lower on Friday. The Nasdaq composite fell more than 3%, and the S&P 500 lost more than 1%. The Dow Jones Industrial Average fell by less.
The sell-off began earlier this month and gathered pace after disappointing results from leading tech companies. It has knocked nearly $1tn off the tech-heavy Nasdaq in one week. It has erased about $2tn in a month.
Intel and Nvidia
Intel tumbled nearly 30% and was flirting with its worst day since 1974. The chipmaker had reported a stronger profit for the latest quarter than analysts expected. Its forecast for the final three months of the year fell far short of their expectations.
Nvidia dropped 3.1%. The company was previously worth about $5tn, and its chips have made it the poster child of the AI frenzy. The fall was the heaviest single force pulling the S&P 500 down.
Amazon slipped 1.8% after reporting a weaker summer profit than analysts expected. It also disclosed that it had spent more this year than anticipated.
A month of scrutiny
Alphabet's stock dropped more than 12% a day earlier. That wiped $500bn from its market capitalization and marked its worst day on record. The company had told investors it burned through more cash in the summer than in the spring because of mammoth investments in AI.
More than $2tn in market value is set to be wiped from the Nasdaq 100 this month. That is slightly more than SpaceX's entire market value. The index is down more than 5.8% in October. Meta Platforms, Alphabet and Amazon have all raised their spending forecasts as they race to expand AI infrastructure.
The S&P 500 was on track to erase its October gain, even though it set its all-time high in the same month. Chip companies and other winners from the datacenter build-out also came under pressure, on concerns that high interest rates may slow further construction.
Beyond tech, the day was mixed. The S&P 500 was roughly evenly split between gainers and losers. Expectations remain high for US companies' ability to make bigger profits, even as people around the world feel discouraged about high inflation and fuel prices.
Source: The Guardian