Nasdaq 100 Futures Fall More Than 2% as AI Spending Concerns Mount
Key Facts
Nasdaq 100 futures fell more than 2% on October 30, after Amazon’s continued spending on artificial intelligence and Intel’s warning about cash burn raised investor concerns over the cost of technological expansion. Reuters said Amazon’s AI spending boom was “far from over,” and that Intel expected cash burn during the year. In another report, Reuters linked the futures decline to concerns that returns might not be sufficient relative to the large investments. This followed pressure on technology stocks in the previous session. Markets were weighing corporate results alongside the amount of money required for AI infrastructure.
In premarket trading on October 30, Amazon shares fell 7.2%, while Intel shares dropped 25%. Nasdaq 100 futures were down 2.16% at 04:04 a.m. Eastern Time. These moves align with investors’ focus on the effect of capital spending on liquidity, even as cloud-computing businesses continue to grow. The selloff also spread to Asia: South Korea’s KOSPI fell more than 3%, and Japan’s Nikkei declined more than 2% on the same day. Losses in both indexes reflected broader pressure on technology and chip stocks outside the United States.
Amazon’s third-quarter results showed strength in one part of its business: AWS sales rose 39.3% to 46 billion dollars, compared with growth of 37% in the previous quarter. The company said this was its fastest growth rate in about five years. But revenue growth did not dispel concerns about financing AI expansion, after the company indicated that the spending boom was continuing. This highlighted the contrast between accelerating cloud activity and the need for substantial capital investment. The market’s question, as Reuters quoted an analyst at Pepperstone, was whether shareholders would earn an adequate return on invested capital.
Intel, meanwhile, exceeded third-quarter earnings estimates, despite warnings that weighed on its shares. Revenue rose 21% to 16.51 billion dollars, in line with estimates, while adjusted earnings came to 52 cents a share, versus expectations of 40 cents. Reuters noted that the company warned of cash burn during the year, adding to concerns about its ability to fund operations and investment. A Reuters report also said the company pointed to slowing growth and continued pressure on the personal-computer market. As a result, beating earnings estimates did not stop the market from focusing on the outlook and cash flows.
Alphabet’s losses added to pressure on the technology sector on October 29, as the stock fell 12.6%, its worst day since it began trading more than 20 years ago. GOOGL closed at 283.82 dollars, compared with 324.89 dollars in the previous session. On the same day, AMZN closed at 243.79 dollars, after closing at 254.6 dollars on October 28. The Nasdaq Composite also fell 1.38% to 26,184.72, as Alphabet’s results weighed on technology and communications services stocks. These moves came amid a broader reassessment by the market of AI-related spending and its potential returns.