US tech stocks see sharp falls as AI spending nears $1tn

Tech stocks tumbled for the second day in a row as concerns rise over the hundreds of billions of dollars firms are investing in artificial intelligence (AI). Shares in Intel plummeted by 28% on Friday, while Google owner Alphabet saw its stock price continue to fall another 1.4% after a 12% plunge on Thursday. Other tech stocks, including Reddit and Amazon also fell, while the Nasdaq index of the largest tech firms listed in the US, ended October with its worst monthly slide since March 2025. While tech firms are spending big on AI, their earnings are not always meeting analysts' expectations, spooking investors and creating fears of an AI bubble. Major tech companies have ramped up artificial intelligence spending, with Meta, Alphabet, Oracle, Amazon, and Microsoft committing to spending $800bn between them in 2026. Alphabet's stock market value fell sharply on Thursday, taking more than $500bn (£374bn) off its market value after it revealed the AI summaries it now provides as the top answer to search queries were affecting its core search advertising revenue. At the same time, Alphabet expects to spend up to $205bn this year on investments, almost entirely related to AI. The bigger losses on Friday were elsewhere however, with Intel shedding more than $130bn in value. The chip maker said it planned to increase spending on AI despite weaker demand for computers, a major source of demand for its micro-processors. On Thursday, Intel's finance chief David Zinsner said the firm did not expect to bring in more cash than it spent this year and forecast lower-than-expected revenue for its fourth quarter. "Looking ahead, we PC slowdown continuing at least through the first half of next year," he said in the chip maker's third quarter earnings report. In the earnings call, he said the firm had significantly ramped up investment in equipment in the third quarter and expected that to be "even more significant" in the following three months. Amazon on Thursday revealed it had also spent more cash than it was making, and that spending had increased six-fold over the span of three months. The company has committed to spending $220bn this year, putting the money towards investments such as AI data centres, network equipment, and servers. Amazon shares recovered some overnight losses, but were still down by 1.4% at the end of Friday trading. Reddit stock plunged by 29%, after the social media platform revealed weaker-than-expected daily user figures and warned that Google's growing AI-driven search was hurting referral traffic.