Intel shares plunge 28% amid concerns over AI spending — Channel NewsAsia
US stock markets saw a sharp sell-off in technology shares on October 30 amid investor concerns over companies’ substantial spending on artificial intelligence development. According to Channel NewsAsia, the global MSCI index lost 1.4%, while investors turned to US government bonds as a safe-haven asset.
Decline in technology companies
Shares in microchip maker Intel fell 28% after its earnings report showed significant spending on AI-related development. The company also said demand for personal computers was slowing, which it estimates may persist next year. Amazon shares declined 1.9% after it released results that also showed substantial spending on the development of artificial intelligence technologies.
Shares in Alphabet, Google’s parent company, continued to fall after losing 12.6% the previous day. Alphabet’s heavy spending on AI led to negative cash flow, while its search business faced fierce competition.
Cetera Chief Investment Officer Gene Goldman said that extensive cash burn and high capital expenditures are making the market question whether AI revenue will be able to justify such spending.
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Indices and bonds
As of 12:09 p.m. US Eastern Time, the Dow Jones index was down 0.73% at 51,957.95 points. The S&P 500 lost 1.61%, falling to 7,595.93 points, while the Nasdaq Composite dropped 2.61% to 25,500.67 points. The pan-European STOXX 600 index declined 0.46%.
US government bond prices rose amid the stock sell-off. The yield on 10-year US Treasury bonds fell by 4.36 basis points to 4.945%, while the yield on two-year bonds declined by 5.4 basis points to 4.602%.
Oil rises, precious metals fall
The energy sector, by contrast, posted gains after strong financial results from Exxon Mobil and Chevron. Their shares rose 1.3% and 3%, respectively. According to the outlet, oil prices were heading for a fourth consecutive monthly gain: US crude rose 2% to $104.09 per barrel, while Brent gained 2.4% to $117.58.
Bitcoin fell 1.8% to $77,424.37. The spot price of gold dropped 3% to $3,901.83 per ounce, while silver lost 5.9% to $49.27 per ounce.
