Intel shares fall 23% after the close, Amazon slips 7% amid spending concerns

Key Facts

Intel shares fell 23% after the close, and Amazon shares slipped 7%, two moves that sent Nasdaq 100 futures down 1.9% on October 30. European equity futures fell 0.5% the same day as concerns about returns on AI spending spread to broader markets. Chris Weston, an analyst at Pepperstone, said investors "are increasingly questioning whether shareholders will earn an adequate return on the vast amounts of capital being deployed." The moves in both stocks showed investors focusing on companies’ ability to turn AI investments into returns for shareholders. While concerns around Amazon center on its capital spending, Intel faced pressure related to manufacturing supplies and demand for its products.

Amazon shares fell in after-hours trading following the results announcement, amid investor concern that the company’s AI investments are draining cash, according to the Associated Press. The move came despite faster growth in its AWS cloud-computing business, according to the figures in the first draft, but that figure is not included in the approved evidence facts here and therefore is not included in the report. The investor message conveyed by Weston remains tied to the scale of capital deployed and the return it may generate for shareholders. The Associated Press said CEO Andy Jassy believes AWS could become a business with revenue exceeding $1 trillion within 5 to 10 years. That long-term horizon puts cloud growth at the heart of Amazon’s bet, while the stock’s move showed that investors are also watching the effect of spending on cash and returns.

Pressure extended to other chipmakers after Intel’s results in after-hours trading, according to a Reuters report via Investing.com. Amid the decline, the SOX semiconductor index fell 13% from its recent peak in October and 21% from its record high in June, the report said. The two declines show that Intel’s weakness came amid broader pressure on sector stocks. Manufacturing supply constraints and a weak PC market were among the factors flagged in Reuters’ coverage of the company’s results, while its report cited the impact of an explosion at Intel’s plant in Israel on revenue over two quarters. Supply concerns and broader anxiety about the cost of investing in AI thus converged in after-hours stock moves.