Nasdaq Composite Falls 2.5% Friday Morning as AI Cost Concerns Mount
Key Facts
The Nasdaq Composite fell 2.5% by 9:35 a.m. ET on Friday, October 30, as technology stocks declined, according to data cited by the Associated Press. The pressure followed results from Amazon and Intel that refocused attention on the cost of building AI infrastructure and whether spending can continue at a high pace. At the same time, Nasdaq futures fell more than 2%, according to Reuters, after Amazon indicated that its AI spending boom was nowhere near over and Intel warned of cash burn during the year. The Nasdaq Composite had closed Thursday, October 29, down 1.36% at 26,188.08 points, while the S&P 500 lost about 0.31%, according to preliminary data cited by Reuters. The difference between Thursday’s figures and Friday morning’s decline reflects that the 2.5% figure refers to the index’s movement during Friday trading, not its close the previous day.
Amazon was among the biggest drags on the market, with its shares falling 4.4% in Friday trading after the company reported summer-quarter earnings that fell short of analysts’ expectations, according to the Associated Press. The results also revealed the scale of the cash investment accompanying its AI expansion: the company recorded negative free cash flow of $42.4 billion over the 12 months through the third quarter of 2026. Amazon attributed the cash drain mainly to increased purchases of equipment and property related to its AI investments. The figures set growth in its cloud business against the spending required to expand it, putting cash flow at the center of investors’ assessment of the results. Market concerns extended beyond one company, focusing on whether large AI investments will generate enough earnings and productivity to justify them, according to the Associated Press.
By contrast, Amazon’s results showed an acceleration in its cloud computing business. Sales at Amazon Web Services rose 39.3% to $46 billion in the quarter ended September 30, 2026, compared with growth of 37% in the previous quarter, marking the fastest pace of growth in about five years, according to the Associated Press. The performance highlights strong demand for digital infrastructure services used by AI applications, but coincided with the negative free cash flow the company recorded over the 12-month period. Investors therefore saw two developments at once in the results: rapid growth in cloud-services sales and heavy spending on the equipment and property needed to continue expanding. Amazon’s indication that the AI spending boom would continue added to concerns about the rising cost of building this infrastructure, Reuters reported.
Intel’s shares, meanwhile, fell 28.8% in Friday trading despite the company reporting quarterly profit above analysts’ expectations, according to the Associated Press. The disconnect stemmed from the company’s outlook: its fourth-quarter profit forecast fell short of analysts’ estimates, while Reuters reported that the company expected cash burn during the year. Intel also said the slowdown in the personal-computer market could continue through the first half of 2027, despite describing demand for its processors as strong. Concerns about the outlook and cash flows thus outweighed the strong quarterly profit and the company’s characterization of demand. The Associated Press noted that pressure also hit chipmakers and other beneficiaries of AI data-center construction, amid concerns that high interest rates could slow the pace of expansion.
The discussion also extended to how investments are being financed, with Reuters reporting that several companies had turned to the bond market to fund AI-related spending. That has raised concerns that justifying debt-financed spending could become more difficult as borrowing costs rise. The concern comes alongside the possibility that high interest rates could slow data-center construction, according to the Associated Press, leaving companies facing both higher financing costs and the prospect of slower expansion. In equity markets, Thursday’s decline in the Nasdaq Composite preceded Friday morning’s pressure, with the index falling 1.36% to 26,188.08 points, according to preliminary data cited by Reuters. The trajectory of the personal-computer market remained a near-term focus for Intel, which said the slowdown could continue at least through the first half of next year.