Nasdaq-100 futures fall 2.6% as AI spending concerns mount
Key Facts
Nasdaq-100 futures fell 2.6% at 08:15 a.m. Eastern time on October 30, while S&P 500 futures declined 1.12%, according to Reuters. The moves came before the market open, amid renewed concern about the scale of spending on AI infrastructure and the time needed to generate returns. Reuters linked the pressure to Amazon’s AI spending plan and Intel’s warning about cash depletion. Before the open, Amazon shares fell about 7%, while Intel shares dropped more than 25%, according to the Associated Press. The agency noted that Alphabet shares had fallen 12% in Thursday’s session, their biggest daily percentage decline.
The two companies’ results were not alike: Amazon reported a 12% rise in third-quarter net sales to $201.9 billion, compared with $180.2 billion in the same period of 2025. But its quarterly results fell short of Wall Street analysts’ expectations, according to the Associated Press, and its fourth-quarter sales guidance also made the market cautious. The company forecast revenue of $240 billion to $247 billion for the period, a range around the average analyst estimate of $244.51 billion. However, the midpoint of the forecast range, at $243.5 billion, came in slightly below that estimate, according to Reuters. The agency said cautious guidance for the quarter that includes the holiday shopping season added to pressure on the stock.
By contrast, Intel’s third-quarter results exceeded the company’s guidance: revenue was $16.5 billion, up 21% year over year, and revenue, gross margin and earnings per share all exceeded guidance levels. Investor concerns centered on the fourth-quarter outlook: the company set revenue at $15 billion to $16 billion, below the average analyst estimate of $17.07 billion. It also forecast diluted earnings per share of $0.10 under GAAP, or $0.25 under non-GAAP. The chief financial officer said the company does not expect positive cash flow during 2026, while weaker-than-expected revenue guidance put pressure on the stock. The Associated Press attributed the premarket drop to this fourth-quarter outlook and continued weakness in the personal computer market.
Intel expects weakness in the personal computer market to continue at least through the first half of 2027, Reuters reported, citing the chief financial officer. PC chips accounted for about half of the company’s third-quarter revenue, while Intel expects sales in that segment to fall more than 20% quarter over quarter in the fourth quarter. The company also faces chip supply constraints: Reuters attributed a roughly $300 million cut to fourth-quarter revenue guidance and a reduction of about 200 basis points in the gross margin outlook to an explosion at its plant in Kiryat Gat. The chief financial officer expects a similar impact in the first quarter. These factors add to concerns about liquidity and the spending required to expand production, despite quarterly revenue growth.
For Amazon, expansion of AI infrastructure is putting increasing pressure on cash alongside strong growth in its cloud computing business. The company said it expects to spend $220 billion on capital expenditures during 2026, with most of that going toward building AI data centers. Its capital spending was $77.26 billion in the September quarter, while free cash flow showed a deficit of $42.4 billion on a trailing 12-month basis through that quarter. That compares with positive free cash flow of $14.8 billion in the third quarter of 2025. Reuters quoted the company as saying capital spending was the main driver of this shift, as investors monitor how quickly the investment turns into returns.
Despite the concerns, AWS services posted annual growth of more than 39% in the third quarter, and Chief Executive Andy Jassy said the company expects revenue growth of more than 40% in both 2027 and 2028. But that expected trajectory is accompanied by massive spending that raises market questions about the timing of returns. A Reuters report estimated that Amazon and Intel could together lose about $300 billion in market value if the two stocks’ losses continue, and that the Nasdaq-100 could shed nearly $1 trillion. That would add to a loss of about $1.4 trillion in the index’s market value during October through October 30. “The issue is more about what is priced into the stock and the scale of expectations investors have,” said Art Hogan, chief market strategist at B. Riley Wealth.