Intel shares plunge 28.6 percent as AI spending fears grip Wall Street

Intel shares dropped 28.6 percent on Friday, marking the steepest decline in the company's history since 1974. The move dragged the S&P 500 down by 1.6 percent, putting the index on track to lose all of its gains for the month of October. The Nasdaq composite fell 2.5 percent, while the Dow Jones Industrial Average slipped 0.7 percent, or 380 points, as of 11:48 a.m. Eastern time.

The selloff followed strong profit results for Intel in its latest quarter. However, the chipmaker provided a forecast for the final three months of the year that fell far below analyst expectations. CEO Lip-Bu Tan stated that the personal computer industry continues to face pressure, which reduces demand for Intel's central processing units.

Investors are also scrutinizing how much cash major technology companies are spending on artificial intelligence infrastructure. Amazon stock fell 1.9 percent after the company reported weaker summer profits than expected. The firm disclosed that it burned through $42.4 billion in cash over the prior 12 months. It spent $94.8 billion on property and equipment, primarily for AI technology.

The concern extends to other tech giants. Alphabet shares fell more than 12 percent on Thursday, their worst day on record, after the company reported higher cash burn in the summer compared to the spring. Nvidia shares dropped 3.8 percent on Friday, exerting the heaviest pull on the S&P 500. Joe Tigay, a portfolio manager at Equity Armor Investments, noted that the market is moving from a phase of hopes and dreams into a phase where companies must show results.

The tech downturn coincided with a sharp drop in cryptocurrency stocks. A U.S. blockchain intelligence firm said a North Korean unit likely hacked Binance, the world's largest crypto exchange, affecting more than $6 billion in assets. Bitcoin prices fell toward $77,000 from over $86,000 earlier in the month. Coinbase Global shares declined 13 percent, and Strategy shares fell 7.5 percent, despite both companies reporting profits that exceeded analyst expectations.

Some non-tech stocks rose after reporting strong results. Exxon Mobil shares gained 1.2 percent and Chevron shares added 2.6 percent following better-than-expected summer profits. Mondelez International climbed 3.7 percent and Colgate-Palmolive rose 2.9 percent after delivering stronger revenue and profit than predicted. Starbucks fell 2.9 percent because its quarterly revenue missed analyst targets despite better profits.

In the bond market, the yield on the 10-year Treasury fell to 4.95 percent from 4.98 percent late Thursday. This decline occurred even though Brent crude oil prices rose 1.9 percent to $112.86 per barrel. Oil prices remain near the high end of their range since the war with Iran began. International markets also showed weakness, with South Korea's Kospi index dropping 3.5 percent and Japan's Nikkei 225 falling 2.1 percent.