US tech stocks are falling as investors worry about the high costs of developing artificial intelligence. Several major companies reported disappointing earnings.
Major US technology stocks fell sharply on Friday. Investors expressed deep concern over the high costs of building artificial intelligence. These worries caused a broad market slide.
Meanwhile, Intel shares plummeted by 30% during early trading. The company warned of a weak computer market. It also plans to increase spending on AI technology.
Also, Amazon stock dropped by 6% on Friday morning. Its recent earnings report disappointed many investors. The company struggled to meet high market expectations.
Next, the Nasdaq exchange hit a two-month low. It opened 2.5% lower than the previous day. Other tech companies like Reddit and Roblox also saw their shares decline.
Alphabet, the owner of Google, faced more trouble as well. Its value dropped by over $500 billion on Thursday. The company noted that AI search summaries might impact its advertising revenue.
After that, Intel leaders provided a gloomy outlook. Finance chief David Zinsner said the firm will spend more cash than it earns this year. He expects the computer market slowdown to continue into next year.
Furthermore, Intel plans to ramp up equipment investment significantly. These costs will likely grow over the next three months. Investors reacted negatively to this expensive strategy.
Elsewhere, Reddit stock fell by 26%. The platform reported weak daily user numbers. It also blamed Google's AI search for a drop in website traffic.
Additionally, Roblox shares slid by nearly 20%. The gaming platform saw a decline in its daily active users. This news added to the negative sentiment in the tech sector.
Finally, experts suggest the industry is facing growing pains. Companies are spending aggressively on AI tools. Analysts now wonder when these massive investments will produce real profits for shareholders.