Markets
Intel's 28.6% plunge drags the Nasdaq down 2.9% as the AI trade meets a 'show me' test
The S&P 500 had its worst day since June and a third straight weekly loss, while energy and consumer staples shares held up.
HedgeWeekly News Desk ·
US stocks ended Friday's session sharply lower, led by technology. The S&P 500 fell 1.8% to 7,580.07, its worst day since June and its third straight weekly loss, leaving it 3.1% below the record it set earlier in October. The Nasdaq Composite dropped 2.9% to 25,437.00 and the Dow Jones Industrial Average lost 1.1%, or 572 points, to 51,770.31. CNN reported the Nasdaq is now 7.8% below its October high and posted its worst monthly decline since March 2025.
Intel supplied the biggest shock, falling 28.6%, its worst day since 1974, after a fourth-quarter profit forecast that missed analyst estimates. Chief executive Lip-Bu Tan pointed to pressure on the PC industry, even though the company's latest quarterly profit beat expectations. Nvidia slid 4.2% and was the largest drag on the S&P 500. A chipmaker index fell 7.2%. Amazon lost 1.4% after weaker profit than expected, and Alphabet had already fallen more than 12% on Thursday, its worst day on record, after reporting heavier cash burn tied to AI investment.
The damage was concentrated. Outside technology, nearly as many S&P 500 stocks rose as fell. Mondelez gained 3.9%, Colgate-Palmolive 2.3%, ExxonMobil 2.2% and Chevron 1.8%, all after profit beats. The 10-year Treasury yield eased to 4.93% from 4.98% a day earlier, and above 5.30% earlier in October. Brent crude rose 2.4% to $113.43 a barrel. Elsewhere, South Korea's Kospi fell 3.5%, Japan's Nikkei 225 fell 2.1% and Hong Kong's Hang Seng rose 1.5%.
For funds and allocators, the question is whether this is a rotation or the start of a broader de-rating of AI spending. Joe Tigay of Equity Armor Investments told the Associated Press that investors are moving into the 'show me' phase of the AI trade. Amazon spent $94.8 billion on property and equipment over the prior 12 months, mainly for AI, and burned $42.4 billion of free cash flow. With the S&P 500 only 3.1% off its high while the Nasdaq is down 7.8%, index-level positioning masks the gap. Watch how the next round of capital-spending guidance, and a 10-year yield still near 5%, treat the heavy spenders.