Amazon Falls 7%, Intel 23% After Hours as Questions Mount Over AI Spending Returns
Key Facts
Amazon shares fell as much as 7% in extended trading, while Intel dropped 23% after the close, as results from the two companies revealed different challenges involving spending, growth and supply. The after-hours moves followed a session in which Amazon fell 4.3% to $243.79 on October 29, 2026. In Europe, stock futures fell 0.5% on October 30 as concern over AI companies’ spending spread, while Nasdaq 100 futures dropped 1.9%. The two stocks’ moves do not tell the same story: Amazon faces questions about cash flow and returns on capital investment, while Intel warned of a weak PC market and supply shortages.
Heavy spending on artificial intelligence has prompted investors to question whether it will generate adequate returns for shareholders. Chris Weston, an analyst at Pepperstone, said the market was "increasingly questioning whether shareholders will earn an adequate return on the enormous capital being deployed." Meanwhile, sales at Amazon’s cloud computing unit, AWS, rose 39.3% to $46 billion in the third quarter, its fastest growth in nearly five years. That growth puts strong cloud business performance alongside spending and liquidity pressures, two contrasting themes in the company’s results.
Amazon forecast net sales of $240 billion to $247 billion in the fourth quarter, compared with analysts’ average estimate of $244.51 billion. The midpoint of the company’s range is $243.5 billion, slightly below that average, while the quarter includes the year-end shopping season. CEO Andy Jassy told analysts that capital spending next year would be "much higher" than in 2026, without giving a figure. Jassy sought to ease investor concerns, saying: "Our strategy is working, and I expect that to continue for the foreseeable future." He added that AWS revenue could reach $1 trillion in just five years, presenting that as a sign of the scale of the opportunity the company is pursuing in cloud computing.
Intel, by contrast, posted revenue of $16.51 billion in the third quarter ended September 26, up 21%, while adjusted earnings were 52 cents a share, above estimates of 40 cents. But its fourth-quarter forecast was weaker than market estimates: revenue of $15 billion to $16 billion, against an average forecast of $17.07 billion, and adjusted earnings of 25 cents a share, compared with an estimate of 43 cents. CEO Lip-Bu Tan said: "I’m disappointed that we were unable to meet strong customer demand this quarter." He attributed near-term challenges to manufacturing supply shortages and an unprecedented memory crunch, which had weakened PC demand. The company expects weak PC demand to continue through the first half of 2027.
Intel added that a fatal explosion at its plant in Israel in October would reduce revenue by about $600 million over two quarters and also cut supplies of AI server chips to cloud computing customers. The company said it does not expect positive cash flow during 2026 as it expands manufacturing capacity. It expects capital spending of $20 billion this year, with a sharp increase in 2027 to secure additional chipmaking tools. These plans put the company to the test of meeting demand while it anticipates weakness in the PC market and faces supply pressures. The semiconductor index rose more than 60% in 2026 through October 29, but had fallen 13% from its recent peak in October and 21% from its record high set in June.