Big Tech stocks fall as investors question AI profitability
Intel, Reddit, and Amazon share prices declined sharply following quarterly reports that highlighted the financial pressures of AI expansion.
Major technology stocks faced significant downward pressure following a series of quarterly earnings reports that underperformed market expectations. Intel led the decline with a 25% drop in premarket trading, driven by weak fourth-quarter guidance and a broader slump in the personal computer market.
Reddit shares fell nearly 20% after reporting that search referral traffic from Google has declined, largely due to the rise of AI-driven search overviews. Meanwhile, Amazon saw its stock slip by 6.3% as analysts reacted to negative free cash flow resulting from massive capital expenditures on AI infrastructure.
These market movements follow a historic decline in Alphabet's stock value, signaling a broader investor shift. Markets are increasingly scrutinizing the returns on the billions of dollars being poured into data centers and AI capabilities, raising concerns about long-term profitability and sustainable free cash flow.