Key facts
- Amazon signaled continued AI spending and Intel warned of cash burn, heightening concerns over the rising cost of the AI buildout.
- Amazon reported a sharp cash outflow in the third quarter and signaled another increase in capital expenditures next year.
- Intel warned it would burn cash this year due to a weak PC market, manufacturing bottlenecks and heavy spending to expand production.
- Amazon and Intel are together poised to lose about $300 billion in market value, if losses hold.
- The S&P 500 and the Nasdaq are on course for weekly gains, but the Nasdaq is set for a monthly drop.
Nasdaq futures tumbled more than 2% on Friday as Amazon signaled its AI spending boom is far from over and Intel warned it would burn cash this year, heightening concerns over the rising cost of the AI buildout. Shares of Amazon.com were down 7.2% in premarket trading after the company reported a sharp cash outflow in the third quarter and signaled another increase in capital expenditures next year, on top of already elevated outlays. The AI trade has run into turbulence recently as investors grew uneasy about the billions Big Tech has poured into scaling up AI infrastructure while awaiting evidence of stronger returns. Several companies have tapped the bond market to finance those investments, amplifying concerns that debt-funded spending will become harder to justify as borrowing costs rise. Alphabet slipped 0.9%, extending losses after a record selloff in the previous session when the Google parent reported disappointing results in its search-advertising business and a sharp increase in cash outflows. Meta reported cash burn in the September quarter last week. Microsoft, the only exception, nevertheless raised $25 billion through a debt sale on Thursday. Intel tanked 25% in premarket trade on Friday after the chipmaker warned it would burn cash this year due to a weak PC market, manufacturing bottlenecks and heavy spending to expand production. Amazon and Intel are together poised to lose about $300 billion in market value, if losses hold. The broader semiconductor space was under pressure, with Nvidia down 2.5%, AMD sliding 7% and Broadcom losing roughly 4%.