US tech stocks see sharp falls over AI cost fears

US technology shares fell sharply as investors questioned whether the enormous expense of building AI infrastructure will produce adequate returns. The Nasdaq opened down 2.5%, its lowest level in more than two months, after a week of earnings updates raised concerns about rising costs and weakening business conditions. Alphabet lost more than $500bn in market value after saying AI-generated search summaries were affecting revenue from its core search advertising business; its shares slipped further on Friday.

Intel suffered the steepest fall, with shares dropping as much as 30% and the company on course to lose more than $130bn in value. It forecast weaker fourth-quarter revenue and said the slowdown in PC sales could continue into the first half of next year, while also increasing investment in equipment for AI. Amazon shares fell as much as 6% after earnings missed expectations and spending rose sharply, leaving the company spending more than it brought in. Reddit dropped 26% after reporting weaker user figures and warning that AI-driven Google search was reducing referrals; Roblox fell nearly 20% after its active-user numbers declined. Investors and analysts see these results as signs of growing strain across the sector as major firms pursue costly AI expansion.