A brutal session for technology shares
The Nasdaq Composite dropped 610 points, a 2.3% decline, in early trading on Friday. The fall followed earnings releases from Alphabet, Amazon and Intel that disappointed investors and revived anxiety about the future of artificial intelligence. The S&P 500 slipped 1.2% and the Dow Jones Industrial Average lost 0.4% after the opening bell. Other outlets reported the same sharp tech-led decline at the open.[S1][S2][S3][S4]
Intel was the hardest hit: its shares fell nearly 29% once the market opened. Alphabet's Class A stock had already slid more than 12% on Thursday, its weakest session since the company listed as Google in 2004. That single-day drop removed roughly $500 billion from Alphabet's market capitalization.[S1]
Investors question the AI payoff
The underwhelming results are deepening doubts that the enormous sums being poured into AI will deliver the returns Wall Street has been counting on. Investors are also weighing the borrowing companies are undertaking to fund data center construction and whether that debt load can be sustained.[S1]
Market analyst Adam Crisafulli, who heads Vital Knowledge, described the period in a research note as one of the weakest tech earnings seasons in memory, pointing to soft results across a series of prominent firms.[S1]
Ulrike Hoffmann-Burchardi, chief investment officer for the Americas and global head of equities at UBS' Chief Investment Office, urged clients in a report this week to look past AI for diversification. She said her team remains positive on the theme's structural growth but warned that elevated expectations and potentially divergent company outcomes highlight the danger of concentrating in a single stock, and she argued for broadly spread equity portfolios.[S1]
