U.S. stock markets experienced significant declines on Friday, with technology shares leading the downturn amid heightened concerns about artificial intelligence (AI) investments and their profitability. The S&P 500 dropped 1.8 percent, marking its steepest daily fall since June, and concluded a third consecutive week of losses. The Nasdaq composite fell 2.9 percent, driven by broad weakness in tech stocks, while the Dow Jones Industrial Average declined 1.1 percent.
Despite trading near historical highs that have supported gains in retirement accounts such as 401(k)s, investor sentiment has been unsettled by uncertainty surrounding AI developments, particularly in the lead-up to the upcoming midterm elections.
Leading the decline was Intel, whose shares plunged 28.6 percent after issuing a profit forecast that fell short of analysts’ expectations. The company cited ongoing challenges in the personal computer market, contributing to its sharpest single-day drop since 1974. Amazon’s stock also declined 1.4 percent following its earnings report, which revealed weaker-than-anticipated profits for the summer quarter and a $42.4 billion cash burn over the past year, largely attributed to AI-related investments.
Alphabet, the parent company of Google, suffered a more than 12 percent decrease in its share price the previous day, marking its largest drop on record. The company highlighted rising cash outflows linked to AI development as a key factor. Nvidia, a major supplier of AI chips, saw its stock fall 4.2 percent on Friday, representing the most significant single negative impact on the S&P 500 that day.
Amid these developments, investors have expressed growing skepticism about whether the substantial capital being channeled into AI research and infrastructure will ultimately translate into sufficient profits and productivity gains to justify the expenditure.
The technology sector’s difficulties also extended into cryptocurrencies, where major crypto-related stocks declined following a security breach at Binance. Bitcoin’s price dropped below $77,000, and U.S.-based blockchain firms attributed the attack to a North Korean actor. Despite reporting strong quarterly earnings, cryptocurrency exchange Coinbase and related strategy stocks also fell during the trading session.
Outside of technology, stocks in sectors such as energy and consumer goods performed comparatively well. ExxonMobil, Chevron, Mondelez, and Colgate-Palmolive all posted better-than-expected summer earnings, contributing to outperformance within their segments.
In the fixed income markets, Treasury yields eased as investors shifted toward safer assets amid the increased market volatility, signaling heightened caution among bond market participants.