AI stock selloffs fuel fears Big Tech's best quarters are over

A sharp selloff in major technology stocks reflects growing doubt that the enormous cost of the artificial-intelligence boom will soon produce profits to match. Companies are pouring hundreds of billions of dollars into data centers, chips and large language models, but demand and future returns remain uncertain; some firms also say development must slow to address safety. Quarterly results reinforced the concern that spending is rising before AI earnings arrive, while the technology may disrupt profitable existing businesses. The Nasdaq 100 fell about 4%, erasing more than $1 trillion in market value, and the S&P 500 dropped more than 2%. Overall corporate earnings growth had eased to roughly 26%, from 32% in the prior quarter, amid pressure from interest rates, tariffs and oil prices.

Several prominent companies faced sharp investor reactions. Intel shares plunged more than 30% after the chipmaker forecast weaker results, citing an Israeli factory explosion, sluggish PC sales and high memory-chip prices partly driven by AI demand. Amazon reported negative free cash flow of $42 billion as it invests heavily in AI; Alphabet, Meta and ServiceNow also fell after results, while Microsoft initially rose on strong earnings before slipping. Investors are questioning whether growth can sustain elevated expectations, and some are shifting gains from technology into cheaper sectors. Yet the retreat does not signal a wholesale exit from stocks: analysts note that earnings may still grow, and some remain confident in technology’s longer-term prospects, arguing that patience is needed while companies build out infrastructure.