On October 30th, the sell-off of tech stocks in the U.S. market continued, with the latest financial reports from Amazon and Intel exacerbating investors' concerns regarding the capital expenditure of AI and the demand prospects for the semiconductor industry. At 7:15 p.m. Beijing time on the 30th, NASDAQ 100 index futures fell by 2.5%, S&P 500 index futures fell by 1.1%, while Dow Jones futures saw a slight increase of 0.1%. Previously, affected by the plummeting stock price of Google's parent company Alphabet, the NASDAQ Composite Index closed down 1.38% on Thursday, with tech stocks under pressure for two consecutive trading days.
Amazon and Intel's performance trigger a new wave of selling
Amazon's stock price fell more than 6% before the market opened. Previously released third-quarter financial reports showed that the company's core e-commerce and advertising businesses experienced slower growth, which offset the positive impact of strong growth in its cloud computing business. In the third quarter, Amazon Web Services (AWS) revenue reached approximately $46 billion, marking the fastest growth rate in many years. However, the company still maintains a capital expenditure plan of around $220 billion for 2026. Free cash flow has turned negative over the past 12 months, exacerbating market concerns about the return on investment in AWS.
Meanwhile, Intel's stock price tumbled by more than 25% before the market opened, mainly due to weak fourth-quarter earnings guidance. The company expects fourth-quarter revenue to be between $15 billion and $16 billion, significantly lower than the market's forecast of $17.08 billion, reflecting weak demand for personal computers and ongoing supply chain issues. Intel also stated that global shortages of memory chips have made it difficult for PC manufacturers to obtain key components, further affecting the shipment volume of personal computers and market demand.
AI Capital expenditure and financing pressures raise concerns; funds shift to U.S. Treasury bonds as a safe haven
This round of selling in tech stocks began with Alphabet's third-quarter financial report falling short of expectations. The company's stock price recorded the largest single-day decline in history on Thursday, with its market value evaporating by over $500 billion. Although Alphabet continued to expand its AI infrastructure investments, the growth rate of its core search advertising business dropped to its lowest level in five quarters, raising doubts among investors about whether such substantial capital expenditures will yield corresponding returns.
Microsoft is also affected by concerns over AI investments. The company recently completed a $25 billion bond issuance, becoming another large technology firm to support the construction of AI infrastructure through debt financing. As more tech giants rely on bond issuance and equity financing to support data center expansion, investors are beginning to worry that the continuously sluggish valuations of tech stocks may weaken these companies' financing capabilities, which in turn could affect future AI investment scales.
Analysts from Vital Knowledge pointed out that after experiencing severe fluctuations for most of October, the sentiment towards tech stocks began to improve earlier this week, but the successive release of financial reports once again hit market confidence. Investors are concerned that the continuous decline in tech stocks could create a negative cycle with corporate financing pressures, further dragging down investments in data centers. At the same time, some funds have shifted from tech stocks to U.S. Treasury bonds in search of safety, driving up the prices of U.S. Treasuries.
