Nasdaq Drops 2.5% as Big Tech AI Spending Stokes Return Fears
Updated
Updated · CNN · Oct 30
Nasdaq Drops 2.5% as Big Tech AI Spending Stokes Return Fears
3 articles · Updated · CNN · Oct 30
Summary
The Nasdaq fell 2.5% and the S&P 500 lost 1.3% on Friday as investors questioned whether surging AI outlays will generate profits soon enough.
Amazon dropped 4% after signaling more AI spending, Intel plunged 29% on weak fourth-quarter guidance, and Alphabet slipped again after a 12% slide erased about $500 billion in market value.
Those worries are hitting cash flow: Amazon reported negative free cash flow of $42.4 billion over the past 12 months, while Google and Meta have also posted recent negative free cash flow as capex climbs.
Microsoft has been a notable exception, reporting $18.6 billion in quarterly free cash flow and holding within 5% of its recent record high.
The sell-off capped a bruising month for AI-linked stocks, with investors now demanding clearer evidence that data-center spending will protect core businesses and eventually pay off.