Technology companies lost more than $1 trillion in market value on Friday as investors questioned whether massive investments in artificial intelligence (AI) would generate sufficient returns.
The Nasdaq 100 plunged 3.4%, marking its biggest one-day drop since mid-June, while the S&P 500 dropped 1.8%. Technology stocks led the broader market decline as investors demanded stronger evidence that spending on AI infrastructure would translate into sustainable profits.
Concerns over the returns on tech companies’ heavy AI spending grew after several firms posted lackluster earnings this week.
Big Tech earnings this week left investors and analysts asking when all that AI spending will start paying off. So far, returns aren’t keeping pace, and some companies’ traditional revenue drivers are underperforming.
Intel led the market decline. The sell-off hit semiconductor companies particularly hard, with Intel suffering its worst trading day on record. Its shares plunged 29% after the company forecast weaker-than-expected sales and profits.
Intel CEO Lip-Bu Tan attributed the disappointing outlook to manufacturing difficulties, supply shortages and a severe memory crunch. These challenges have made it harder for the company to meet strong customer demand.
Other chipmakers also suffered significant losses. SanDisk shares fell 13%, while AMD, ARM Holdings, Qualcomm and Marvell each dropped around 10%.
Alphabet had its worst trading day ever on Thursday, losing about $475 billion in market value. Investors reacted to disappointing search revenue growth and a roughly $9 billion free cash flow deficit, underscoring the financial strain of its AI infrastructure investments.
Amazon also rattled investors with its spending plans. The company reported higher AI-related spending and slower growth in its online shopping business.
CEO Andy Jassy said Amazon expects capital expenditure to reach approximately $220 billion in 2026, with spending increasing further in 2027.
The latest market sell-off reflects growing skepticism about the economics of the AI boom. While tech giants continue to invest heavily in data centers and computing infrastructure to gain an edge, investors are increasingly focused on whether those investments can deliver returns that justify their enormous costs.