Intel Plunges 29% and Alphabet Loses $500 Billion as AI Doubts Hit Tech Stocks

The Nasdaq Composite Index fell 610 points, a 2.3 percent drop, in early trading on Friday. The decline followed earnings reports from Alphabet, Amazon, and Intel that missed investor expectations. These results have intensified worry that spending on artificial intelligence may not yield the profits Wall Street predicted.

Intel shares lost nearly 29 percent when trading began. Alphabet stock continued its decline after its Class A shares dropped more than 12 percent on Thursday. That Thursday drop represented the worst single day for the company since its 2004 public offering as Google. The loss erased approximately $500 billion from Alphabet’s market value.

Adam Crisafulli, head of Vital Knowledge, described the recent period in a research note. He called it one of the worst tech earnings seasons in memory. Crisafulli noted that many prominent companies delivered underwhelming results.

Broader market indicators also moved lower at the start of the day. The S&P 500 index slid 1.2 percent. The Dow Jones Industrial Average fell 0.4 percent following the opening bell.

Investors are questioning whether massive capital expenditures for data centers will be sustainable. Companies are taking on significant debt to finance these projects. Adam Turnquist, chief cross-asset strategist at LPL Financial, said mega-cap stocks have faced increased selling pressure over the past two weeks. Turnquist added that recent earnings revealed slowing growth in the core businesses of select hyperscalers.

Ulrike Hoffmann-Burchardi, CIO Americas and global head of equities for UBS, advised clients to diversify beyond AI in a report released earlier this week. She stated that high expectations create risks of single-stock concentration. Hoffmann-Burchardi recommended that investors ensure their equity portfolios are broadly diversified while maintaining a constructive outlook on the structural growth of the AI theme.