Amazon and Intel Plunge After Disappointing Results, Fueling Wall Street’s Nerves About AI Spending

Amazon and Intel shares tumbled on Friday after their latest earnings reports raised fresh concerns about the cost of technology investments and whether companies can deliver the returns investors expect.

Amazon fell about 3%, pairing earlier losses, while Intel plunged more 25%, putting additional pressure on technology stocks after a difficult week for some of the industry's biggest names. The Nasdaq Composite is declining more than 2% at 9:42 a.m. ET. Shares of chipmakers Nvidia, Micron and Arm also moved lower.

For Amazon, the concern was not a lack of growth. The company reported record operating profitability and strong demand for its cloud services, but its spending on artificial intelligence infrastructure is consuming large amounts of cash.

Amazon maintained its forecast for approximately $220 billion in cash capital expenditures this year, even as free cash flow turned sharply negative.

The company's third-quarter earnings release showed that free cash flow for the 12 months ended September fell to negative $42.4 billion, compared with positive $14.8 billion a year earlier.

Amazon attributed the decline primarily to a $94.8 billion year-over-year increase in net purchases of property and equipment, largely related to AI investments.

The spending comes despite significant improvements in its underlying business. Amazon's quarterly revenue rose 12% to $201.9 billion, while operating income climbed to $28.1 billion from $17.4 billion a year earlier. Its operating margin reached a company record of 13.9%.

Amazon Web Services, which provides cloud computing services to businesses, reported revenue growth of 39% to $46 billion, its fastest expansion in nearly five years.

The cloud division also generated $17.8 billion in operating income, compared with $11.4 billion during the same period last year.

CEO Andy Jassy said investments in AWS infrastructure were supporting stronger demand and projected revenue growth exceeding 40% in both 2027 and 2028.

Amazon expects fourth-quarter revenue of $240 billion to $247 billion, representing growth of 12% to 16% from a year earlier. Its operating income forecast ranges from $28.5 billion to $33.5 billion.

Intel faced a different set of challenges, with continued weakness in the personal computer market overshadowing improvements in its data center business.

The chipmaker's third-quarter results showed revenue increased 21% to $16.5 billion, while adjusted earnings reached 52 cents per share, more than double the 23 cents recorded a year earlier.

However, Intel projected fourth-quarter revenue of $15 billion to $16 billion and adjusted earnings of 25 cents per share. The outlook disappointed investors, despite the stronger third-quarter performance.

Intel's Client Computing and Physical AI business, which includes processors for personal computers, reported a 5% revenue decline to $8.1 billion. By contrast, its Data Center and AI division recorded 78% growth, bringing quarterly revenue to $7.3 billion.

Chief Financial Officer David Zinsner said Intel expected the PC market slowdown to continue at least through the first half of 2027. The company is also investing in additional production capacity to address strong demand for its Xeon server processors.

Intel CEO Lip-Bu Tan said improving manufacturing execution and expanding supply remained priorities as the company worked to strengthen its product lineup.

The market reaction extended beyond Amazon and Intel. Alphabet shares had fallen 13% on Thursday, their biggest one-day percentage decline on record, after investors reacted to heavy spending and cash outflows despite substantial growth in its cloud business.

The Google parent reported third-quarter revenue of $127.6 billion, an increase of 25% from a year earlier, with Google Cloud revenue more than doubling to $30.7 billion.

Microsoft, however, provided a contrast. Its fiscal first-quarter results showed revenue increased 19% to $92.3 billion, while operating income rose 21% to $45.9 billion.

The company also remained free-cash-flow positive despite spending heavily on AI infrastructure, helping its shares avoid the initial selloff that followed some of its rivals' earnings reports.