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Wall Street tech rout deepens on doubts over AI spending

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Wall Street tech rout deepens on doubts over AI spending

Business News Tech AI Wall Street tech rout deepens on doubts over AI spending

Major US tech stocks have taken a hit as investors react to underwhelming earnings and worries about AI spending. Giants like Microsoft, Amazon, and Alphabet revealed hefty investments in AI systems along with rising debt. Intel's troubles intensified with a disappointing revenue outlook, driven by costly components and fierce rivalry.

Shares in US tech giants were pummeled on Friday, capping a week of earnings results that raised questions on Wall Street about whether the AI spending bonanza was sustainable. Microsoft, Alphabet and Amazon all reported quarterly results this week, and each signaled it would keep pouring money into data centers and chips even as investors grow impatient for returns. Along with Meta that reported last week, together the four companies are on track to spend more than $700 billion on capital investment this year -- roughly the size of Argentina's or Belgium's entire economy -- much of it on AI infrastructure, according to analyst estimates.

The companies are "all showing some pretty significant growing pains as they... aggressively pursue the AI build-out," Christopher Low of FHN Financial told AFP. Low said that while the sell-off reflected company-specific stories, the market was reading them as signs that the entire sector would slow. Chipmaker Intel was the hardest hit, with its shares sinking as much as 30 percent after it gave a weaker-than-expected revenue forecast for the fourth quarter, citing weakness in the PC market and manufacturing bottlenecks.



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