US stocks fell sharply on Friday, with the Nasdaq Composite recording its largest one-day percentage decline since June 5 as disappointing results from Intel and Amazon intensified concerns about the returns on massive artificial intelligence investments.
The technology-heavy index dropped 2.86% to 25,437, while the S&P 500 declined 1.82% to 7,580.07. The Dow Jones Industrial Average fell 1.09% to 51,770.31.
Selling pressure spread across semiconductor stocks and major technology companies as investors reassessed the outlook for AI-related spending.
The declines also reflected concerns about whether companies can generate sufficient returns from the infrastructure being built to support the technology.
All three major indexes ended the week lower. The S&P 500 and Nasdaq also recorded monthly losses in October, while the Dow finished the month higher.
Intel and Amazon results weigh on technology stocks
Intel shares plunged around 29% after the chipmaker issued a weaker-than-expected revenue forecast for the fourth quarter. The company expects revenue of $15 billion to $16 billion, below analysts’ estimates of $17.1 billion.
The forecast followed third-quarter adjusted earnings of 52 cents per share, ahead of expectations of 40 cents.
Revenue reached $16.51 billion, slightly above the $16.5 billion consensus estimate.
Amazon also came under pressure after reporting third-quarter earnings and revenue that missed Wall Street expectations.
The company reported negative free cash flow of $42.4 billion and maintained its 2026 capital expenditure forecast of $220 billion.
The weakness extended across the semiconductor sector.
The Philadelphia Semiconductor Index recorded a monthly loss, while Advanced Micro Devices fell 11%. Nvidia and Broadcom declined 4% and 5%, respectively.
SanDisk lost 13%, despite reporting better-than-expected fiscal first-quarter results.
The broader technology sell-off also affected AI infrastructure companies.
CoreWeave shares fell more than 37% in October, while Nebius posted a monthly decline of 34%. The Roundhill Memory ETF, which includes Micron and Seagate Technology, lost 20% during the month.
Investors reassess AI spending and returns
The latest declines reflect growing scrutiny of the financial commitments behind the AI boom.
Investors are increasingly focused on whether large technology companies and infrastructure providers can translate substantial capital expenditure into sustainable returns.
Alphabet shares recorded their worst day on record on Thursday after missing third-quarter earnings and revenue expectations and reporting negative free cash flow of $9.07 billion.
Meanwhile, concerns about financing have weighed on neocloud companies that provide computing infrastructure for AI data centres.
CoreWeave has faced rising bond yields, adding to investor concerns about debt levels across the sector.
Reports that Blackstone told investors Anthropic may not receive an investment-grade credit rating after its planned market debut also added to the pressure.
The shift in sentiment has prompted investors to move away from some technology stocks and towards more defensive sectors.
Consumer staples and healthcare shares advanced on Friday, with Walmart and Coca-Cola each gaining more than 1%. Merck and Amgen also rose.
October ends with mixed performance across Wall Street
Despite Friday’s losses, third-quarter corporate earnings have remained broadly positive.
Of the 299 S&P 500 companies that had reported results, 82% exceeded consensus expectations, according to LSEG data.
Analysts now expect S&P 500 earnings to grow 31.6% year over year in the quarter.
Energy companies Exxon Mobil and Chevron also beat quarterly profit expectations, benefiting from higher refining margins amid energy supply disruptions linked to the US-Israeli war with Iran and Russia’s war in Ukraine.
However, the technology-led weakness weighed on the broader monthly performance.
The Nasdaq was heading towards a 5% October decline, its steepest monthly fall since March 2025. The S&P 500 was on track to lose less than 1%, while the Dow was poised to gain around 2%.
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