US stocks opened lower on Friday as disappointing results from Amazon and a weak outlook from Intel intensified concerns about the rising costs of artificial intelligence infrastructure and the time required for companies to generate returns on their investments.
The Nasdaq Composite fell 2.44%, while the S&P 500 dropped 1.3%. The Dow Jones Industrial Average was down 175 points.
Friday was the final trading session of October, with the Nasdaq Composite on track to end the month lower despite gains in the broader market.
Amazon and Intel lead technology sell-off
Amazon shares fell around 4.4% in trading after the company reported third-quarter revenue and earnings below Wall Street expectations.
The e-commerce and cloud computing giant also reported negative free cash flow of $42.4 billion over the trailing 12 months, compared with positive cash flow of $14.8 billion in the year-earlier period.
Amazon maintained its capital expenditure forecast of approximately $220 billion for 2026, adding to concerns about the scale of its AI infrastructure investments and the pressure on cash generation.
Intel shares plunged more than 29% after the chipmaker issued a weaker-than-expected outlook for the current quarter.
The company faces challenges from a slowing personal computer market, manufacturing bottlenecks, and heavy investment to expand production capacity.
Intel’s client computing revenue declined 5% year over year to $8.1 billion in the third quarter, reflecting pressure in the PC market.
Other semiconductor and hardware stocks also fell.
Advanced Micro Devices dropped 9%, Nvidia declined 3.3%, and server makers Dell and HP lost 8.3% and 5.6%, respectively. SanDisk shares fell 7% despite quarterly results that exceeded estimates.
AI investment costs weigh on market sentiment
The sell-off reflects growing scrutiny of the spending required to build AI data centres and expand computing capacity.
Investors are increasingly assessing whether the expected returns from these investments will justify the substantial capital commitments.
Alphabet shares slipped around 1% in trading after plunging 12% on Thursday.
The Google parent reported disappointing results in its search advertising business and negative free cash flow of $9.07 billion in the third quarter.
Meta also reported cash outflows during the September quarter, while Microsoft delivered a stronger-than-expected cash flow result despite raising $25 billion through a bond sale.
Concerns have also spread to companies providing AI infrastructure.
CoreWeave shares have fallen around 36% in October, while Nebius is heading for a monthly decline of approximately 32%, as investors assess debt levels and financing costs across the sector.
Meanwhile, Procter & Gamble, Walmart and Coca-Cola gained around 2% in trading, alongside healthcare stocks.
Nasdaq heads for monthly decline
Despite the latest losses, the S&P 500 and Nasdaq were still on course for weekly gains, following a brief recovery in technology stocks earlier in the week after Anthropic unveiled its US initial public offering filing.
However, the Nasdaq Composite was heading for a decline of approximately 2.5% for October, potentially ending its two-month winning streak.
The S&P 500 was on track to gain 0.9%, while the Dow was set to rise 2.8%.
Nine of the 11 S&P 500 sectors were expected to record monthly gains.
Technology and communication services were among the exceptions, with communication services heading for its worst month since April 2022.
Investors were also monitoring interest-rate expectations.
Markets were pricing in more than 50 basis points of Federal Reserve rate increases by mid-2027, according to LSEG data, despite the central bank holding rates steady earlier in the week.
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