AI spending concerns deepen tech stock selloff

Technology stocks fell sharply as investors questioned the cost of expanding AI infrastructure following disappointing results from Google, Amazon and Intel. The Nasdaq dropped 2.86% on Friday, leaving it nearly 8% below its October peak. Spending commitments that previously signaled confidence in AI are increasingly raising concerns about cash flow and future profitability.

Google shares plunged 12% in a single session as rising AI expenditure coincided with slowing advertising growth and pressure on cash flow. Amazon narrowly missed forecasts and recorded a second consecutive quarter of negative operating cash flow. Intel fell 28% after a weak forecast, triggering a broader semiconductor retreat despite its largely company-specific problems. Nvidia declined 4% and lost its position as the world’s most valuable company to Apple.

Scrutiny is also intensifying around the industry’s interconnected financing arrangements, including Nvidia investments in companies that buy its GPUs and debt-funded data center construction by newer cloud providers. Rising borrowing costs could strain that expansion. Anthropic’s prospectus suggests revenue and costs are beginning to converge, offering a potential counterpoint to concerns about heavy losses. Its planned public offering, potentially at a valuation of around $2 trillion toward the end of November, could test investor appetite. Lower valuations across major technology companies may attract buyers, but investors increasingly want evidence that growing demand can translate into sustainable profits.