Tech equities declined for a second consecutive session as investors grew uneasy about the scale of corporate AI investment. Intel’s share price dropped roughly 28 percent on Friday, while Alphabet, the parent of Google, slipped another 1.4 percent after a 12 percent plunge the previous day. The sell-off reflects worries that the hundreds of billions earmarked for artificial-intelligence projects may outpace the earnings they generate.
The downturn spread to other high-profile names, pulling the Nasdaq index of U.S. technology giants into its steepest monthly decline since March 2025. Shares of Reddit fell about 29 percent after the platform disclosed weaker daily user numbers and warned that Google’s AI-driven search was eroding referral traffic. Amazon and Roblox also posted losses, with the latter’s stock sliding 18 percent as its active-user metrics slipped.
Major players have pledged massive AI budgets, with Meta, Alphabet, Oracle, Amazon and Microsoft together committing roughly $800 billion for 2026. Alphabet alone anticipates spending up to $205 billion this year, almost entirely on artificial-intelligence initiatives. The company’s market capitalization fell by more than $500 billion after it disclosed that AI-generated search summaries were cannibalising core advertising revenue, underscoring the financial risk of rapid AI integration.
Intel’s market value contracted by more than $130 billion as the chipmaker announced plans to boost AI spending despite a slowdown in personal-computer demand. Chief financial officer David Zinsner told investors the firm does not expect to generate more cash than it spends this year and projected lower-than-expected fourth-quarter revenue. He added that the PC slowdown would likely persist through the first half of next year, while equipment investment would intensify in the coming months.
Amazon disclosed that cash outflows now exceed cash generation, with spending rising six-fold over the past three months. The retailer pledged $220 billion for the current year, directing funds toward AI data centres, network hardware and server capacity. Although the stock recovered slightly overnight, it closed Friday still down about 1.4 percent, reflecting investor concern over the pace of capital deployment in the AI arena.
Analysts warned that the sector is experiencing growing pains as firms chase aggressive AI build-outs. Investment manager Chris Low said the market reaction centres on giants such as Amazon and Alphabet, while XTB research director Kathleen Brookes noted that investors have become ruthless, penalising any earnings disappointment. Despite the recent pullback, many valuations remain above last-year levels; the Nasdaq fell 2.8 percent on the day but is up 7.8 percent over the past year, with Amazon nearly 8 percent higher and Alphabet marginally lower.