Key Points

• Amazon and Intel face a risk of a combined market value erosion of approximately $300 billion
• As concerns about AI expenditures deepen, the NSE futures market tumbles sharply.
• Strong cloud demand fails to appease tech investors

On Friday, October 30th, as the disappointing financial reports exacerbated Wall Street's withdrawal from artificial intelligence-related stocks, Amazon and Intel are expected to lose a combined market value of about $300 billion.

Amazon's stock price fell by about 7% before the market opened, while Intel's stock tumbled by about 25%. Nasdaq 100 index futures fell by more than 2%, indicating that technology investors are once again facing a tough day.

This round of selling reflects growing concerns in the market that the expansion of AI's infrastructure spending has surpassed the speed at which companies can demonstrate its ability to generate sustainable financial returns.

The $300 billion estimated in the text refers to the potential market value loss that could occur if the pre-market decline continues until the close of trading, rather than the losses that were already confirmed at the close on Friday.

Amazon's $220 billion AI spending plan shakes Wall Street

Amazon's third-quarter financial report shows that the infrastructure required for building artificial intelligence is putting pressure on the company's finances.

According to its official financial reports, free cash flow has deteriorated from a positive $14.8 billion in the past 12 months to a negative $42.4 billion.

This represents a reversal of $57.2 billion, mainly driven by increased investments in data centers, servers, and other infrastructure.

The company expects cash capital expenditures to be around $220 billion in 2026, and these expenditures may further increase in 2027.

However, its underlying cloud business is still growing rapidly. Amazon Web Services ( AWS ) saw revenue increase by 39% in the third quarter, reaching $46 billion.

AWS Operating profit also rose to $17.8 billion, indicating that despite the group's negative free cash flow, this business segment remains profitable.

This contradiction coincides with the recent cash flow impact of Alphabet, when its quarterly capital expenditure exceeded $51 billion.

For investors, the increasingly significant question is whether the profits that AI will bring in the future will be sufficient to justify the current expenditures, rather than whether there is a demand for cloud computing or not.

Despite the strong growth of AI, Intel's stock price plummeted due to weak demand for PC.

Intel's selling off reflects another set of challenges.

In its third-quarter financial report, this chip manufacturer announced revenue of $16.5 billion, a year-on-year increase of 21%.

Its data center and the AI department achieved revenue of $7.3 billion, a year-on-year increase of 78%.

However, Intel expects its revenue for the fourth quarter to be between $15 billion and $16 billion, which is lower than analysts' forecast of around $17.3 billion.

The company warns that the weakness in the personal computer market may continue until the first half of 2027.

Creating bottlenecks also limits its ability to meet the strong demands of server processors.

Intel's issues indicate that the growth in demand for AI does not necessarily protect chip manufacturers from weak consumer spending, supply disruptions, or heavy manufacturing investments.

Selling pressure spreads, investors question the returns of AI

The pressure is not limited to Amazon and Intel.

Reuters reports that NVIDIA is down about 2.5% at the current time, AMD is down about 7%, and Broadcom is down about 4%.

Alphabet had previously encountered significant selling pressure, which contributed to the broader decline of the NASDAQ on October 29th.

Meanwhile, Amazon, Alphabet, Microsoft, and Meta invested a total of over $200 billion in the third quarter, highlighting the substantial financial commitment behind the expansion of AI.

Some companies are increasingly turning to the bond market. Microsoft's recent announcement of issuing $25 billion in bonds indicates that financing has become another important aspect in the investment debates surrounding AI.