Alphabet plunges 12.6% in worst session in more than 20 years as Intel loses 29%
Key Facts
Alphabet Class A shares fell 12.6% on Thursday, October 29, in their worst session since trading began more than 20 years ago, and the selloff spread to technology stocks in the following session. On October 30, Intel shares fell about 29%, their biggest one-day drop since 1974, after its earnings outlook came in below analysts’ estimates. The two companies faced pressure for different reasons: Alphabet’s quarterly results came in slightly below analysts’ expectations, while Intel’s third-quarter results exceeded its guidance, but its next outlook raised concerns. Alphabet closed at $279.84 and Intel at $65.76 on October 30, according to EL7 data. The breadth of the decline showed investors focusing on companies’ ability to turn heavy AI spending into cash and profits.
At Alphabet, free cash flow was the main concern; it came in at negative $9.1 billion for the quarter ended September 30, compared with FactSet’s forecast for negative $2.23 billion. Axios said the company’s revenue and earnings per share also came in slightly below analysts’ expectations. Purchases of property and equipment, which exceeded $51 billion in the latest quarter, contributed to the drain on free cash, according to the Associated Press. The company forecast capital spending of between $195 billion and $205 billion in 2026, while Chief Financial Officer Anat Ashkenazi told analysts that the company plans a further significant increase in spending during 2027. That puts operating results and cash flows under investor scrutiny as the company continues to fund its AI infrastructure expansion.
Intel’s quarterly picture differed from the characterization of its results as broadly disappointing: third-quarter results exceeded the company’s guidance, but its next quarterly outlook, according to Reuters, came in more than $1 billion below market estimates. The company also said it did not expect positive cash flow during the year. Coverage pointed to weak demand for computers and the rising costs of the AI boom as factors that increased investor concern about the company’s transformation. Pressure therefore focused on the future outlook and liquidity, not on Intel’s third-quarter results failing to exceed its guidance. The stock’s decline on October 30 followed the company’s earnings forecast falling short of analysts’ expectations, according to the Associated Press.
Concerns extended beyond the two companies to major firms financing AI infrastructure. Reuters said results from Meta and Alphabet, before Intel’s report, showed technology companies with limited debt turning into major investors relying on borrowing to fund the race. Amazon also added to spending concerns after recording a large cash outflow and signaling higher capital expenditures next year, on top of an elevated level in 2026. Alphabet, Microsoft, Amazon and Meta together accounted for more than a third of S&P 500 companies’ capital spending over the previous twelve months, according to Capital Economics as cited by Reuters. John Higgins of the firm said investors had become more concerned about the collective scale of the investments and how they are being financed.
This coincided with a broad decline in the U.S. market on Friday, October 30: the S&P 500 fell 1.8% in its worst session since June, the Nasdaq Composite dropped 2.9%, and the Dow Jones fell 1.1%, according to the Associated Press. The agency said investors feared the AI boom would fail to deliver the expected profits and productivity gains as borrowing costs rose to buy more chips and data centers. In the semiconductor sector, shares of other U.S. companies fell between 4% and 12%, and the selloff spread to server companies, according to Reuters. The Nasdaq Composite was down 7.8% from its closing peak through October 30, after recording its worst month since March 2025, Reuters reported. These moves made the merits and financing of spending a central factor in the market’s assessment of technology companies.