US tech stocks fall for a second day in a row amid record AI spending

A second day of declines and record spending

US technology stocks are falling for a second day in a row amid concerns over the hundreds of billions of dollars companies are pouring into artificial intelligence. As BBC News reports, Intel shares plunged 28% on Friday, while Alphabet continued to slide, down another 1.4% after a 12% drop on Thursday. Nasdaq ended October with its worst monthly decline since March 2025. The sell-off comes as Meta, Alphabet, Oracle, Amazon and Microsoft together intend to spend $800 billion in 2026, while company revenues do not always meet analysts' expectations.

Alphabet: AI summaries are hurting advertising

The key event was Alphabet's admission: its Google revealed that AI summaries, now served as the primary answer to search queries, are affecting its core search advertising revenue. According to the BBC, this cost the company more than $500 billion (£374 billion) in market value in a single day. At the same time, Alphabet expects to spend up to $205 billion this year on investments, almost entirely related to AI. Notably, the company itself has become a victim of its own technology: Reddit plunged 29%, warning that Google's growing AI search is reducing referral traffic to the platform.

Intel and Amazon: spending more than they earn

The biggest losses on Friday came from Intel, which lost more than $130 billion in value. The company announced plans to increase AI spending despite weakening demand for computers — the main source of demand for its processors. Intel CFO David Zinsner admitted that the company does not expect to bring in more money than it spends this year and forecast fourth-quarter revenue below expectations. Amazon also said it is spending more than it earns: expenses grew sixfold in three months, and the company has budgeted $220 billion for investments this year, including AI data centers, networking equipment and servers.

Talk of a bubble — but shares are still above last year's levels

Analysts are actively discussing the possibility of an 'AI bubble': the concern is that spending on building data centers and developing software will exceed the revenue it generates. 'Investors have become ruthless, punishing any sign of disappointment in third-quarter earnings,' noted Kathleen Brooks, research director at XTB. FHN Financial analyst Chris Low called what is happening 'serious growing pains' for the biggest players aggressively investing in AI. The BBC, however, emphasizes an important context: despite the decline, the market capitalizations of many companies remain significantly higher than last year's — Nasdaq is up 7.8% over the year, Amazon up almost 8%, and only Alphabet is down 1.3%.

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