AI Stock Sell-Off Deepens as Intel Plunges 30.9%, Nvidia and Amazon Slide

The S&P 500 fell 2.2% as of 2:15 pm Eastern time, putting it on track for its worst trading day since June and its third consecutive weekly decline. The technology-heavy Nasdaq Composite suffered a steeper loss of 3.4%, while the Dow Jones Industrial Average dropped 634 points, or 1.2%.

Despite the latest decline, the US stock market remained just 3.4% below its all-time high, which had boosted the value of workers' 401(k) retirement accounts. However, market conditions have become increasingly unstable just days before Tuesday's midterm elections in the United States. Concerns about artificial intelligence have already emerged as a bipartisan issue among voters, while President Donald Trump has historically treated stock market performance as an indicator of his administration's success.

Intel emerged as one of the biggest losers, with its shares plunging 30.9% and approaching what could become the worst trading day in the company's history, dating back to 1972. The decline followed the chipmaker's disappointing profit forecast for the final three months of this year, which fell short of analysts' expectations. CEO Lip-Bu Tan said the personal-computer industry continues to face pressure.

The sharp sell-off came despite Intel reporting stronger profits for its latest quarter than analysts had anticipated.

Amazon shares also declined 2.1% after the company reported weaker summer profits than analysts expected. However, investors were particularly concerned about its cash position. Amazon reported a negative free cash flow of .4 billion over the previous 12 months. The company spent .8 billion on property and equipment, with most of the expenditure directed towards investments in artificial intelligence technology.

The pressure on technology stocks followed an equally sharp decline in Alphabet a day earlier. The parent company of Google and YouTube saw its shares plunge more than 12%, marking the worst single-day decline in its history and pulling the S&P 500 lower. Alphabet told investors that its cash spending during the summer had increased compared with the spring, largely because of massive investments in artificial intelligence.

Investors are increasingly questioning whether these enormous AI investments will deliver enough profits and productivity gains to justify the expenditure. At the same time, shares of semiconductor companies and other businesses benefiting from the expansion of AI data centres have come under pressure amid concerns that high interest rates could slow further infrastructure development.

"We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase," said Joe Tigay, portfolio manager at Equity Armor Investments, in a note to investors.

Nvidia, the semiconductor company that has become the leading symbol of the artificial intelligence investment boom, fell 5.3%. Its decline exerted the greatest downward pressure on the S&P 500, surpassing even Intel's contribution to the index's losses.

The cryptocurrency sector also faced significant selling pressure following a cyberattack on Binance, the world's largest cryptocurrency exchange. Bitcoin fell below $77,000, compared with more than $86,000 earlier this month. A US-based blockchain intelligence firm said a North Korean unit was likely responsible for the attack, which affected more than $6 billion worth of cryptocurrency at Binance.

Coinbase Global shares dropped 14.2%, despite the company reporting stronger-than-expected results for the latest quarter. Strategy, which says it owns approximately 4% of the total supply of Bitcoin, declined 9%.

Strategy also reported stronger profits for the latest quarter than analysts had expected. However, the company announced that its chief financial officer would resign next week for personal reasons.

Outside the technology and cryptocurrency sectors, several stocks showed greater resilience, with many companies gaining after reporting stronger summer profits than analysts had forecast. Within the S&P 500, the number of advancing stocks was nearly equal to the number of declining stocks.

ExxonMobil shares climbed 1.7%, while Chevron gained 1.5% after both oil companies reported stronger-than-expected profits for the summer.

Mondelez International, the company behind Oreo cookies and Ritz crackers, advanced 4.1% after reporting better-than-expected growth.

Colgate-Palmolive shares rose 3.3% as higher product prices across much of the world helped the company deliver stronger revenue and profits than analysts had anticipated.

Expectations surrounding the ability of US companies to increase their profits remain high, even as consumers across the world face discouragement over elevated inflation and fuel prices. These expectations had helped drive the S&P 500 to its record high earlier this month.

In the bond market, US Treasury yields declined as investors moved towards government bonds in search of safer investments. The yield on the 10-year Treasury fell to 4.92%, compared with 4.98% late Thursday and more than 5.30% earlier this month.

The decline in Treasury yields came despite rising oil prices, which would normally push yields higher by increasing inflationary pressures. Brent crude oil rose 2.4% to $113.50 a barrel, placing it near the upper end of its trading range since the war with Iran drove oil prices and inflation higher.

International stock markets delivered mixed performances, following sharper movements across Asian markets. European indexes were mixed, while technology-related concerns weighed heavily on South Korean shares.

South Korea's Kospi dropped 3.5% as fears surrounding artificial intelligence affected its technology-heavy market. In contrast, Hong Kong's Hang Seng Index advanced 1.5%.

Japan's Nikkei 225 declined 2.1% after the Bank of Japan decided to keep interest rates unchanged, following similar decisions earlier in the week by the Federal Reserve and the European Central Bank.

The latest market movements highlight growing uncertainty over the financial returns from the global artificial intelligence investment boom. With major technology companies facing pressure over spending, cash flows and profit forecasts, investors are increasingly demanding evidence that massive AI investments can translate into sustainable earnings.