US tech shares slide as investors question AI spending returns

US technology shares fell sharply on Friday as investors questioned whether the huge costs of expanding artificial intelligence will deliver sufficient returns. The Nasdaq opened down 2.5%, its lowest level in more than two months, while several major technology stocks extended recent losses.

Intel shares dropped as much as 30% in early trading after the chipmaker warned of a weaker computer market and forecast lower-than-expected fourth-quarter revenue. The company’s finance chief, David Zinsner, said it did not expect to bring in more cash than it spent this year. He also said investment in equipment had risen significantly in the third quarter and would increase further in the next three months.

Amazon shares fell as much as 6% after its reported earnings missed investors’ expectations, before recovering some ground. Alphabet, Google’s parent company, was down 1% after losing more than $500bn in value on Thursday, when it said AI-generated summaries were affecting revenue from its core search advertising business.

Other companies also came under pressure. Reddit fell 26% after reporting weaker-than-expected daily user figures and warning that Google’s AI-driven search was reducing referral traffic. Roblox shares dropped nearly 20% as its daily active user numbers declined.

Chris Low of investment management firm FHN Financial told Reuters that investors were reacting to results from large technology companies including Amazon and Google. He said they were showing “pretty significant growing pains” as they pursued AI expansion, adding that investors were considering whether those signs pointed to a wider slowdown in the sector.

The falls follow a week of earnings reports from major technology companies, including Microsoft, that have raised questions among analysts about the returns from heavy AI investment. Earlier this week, US technology shares had rebounded after sharp losses, but that recovery did not erase concerns about the cost of building AI infrastructure.