Intel falls 28% and Alphabet 12% as tech stocks slide on AI spending fears

US tech stocks fell for a second day in a row at the end of October, as worries grew about the hundreds of billions of dollars companies are pouring into AI. The BBC reports that while firms are spending heavily, their earnings are not always meeting analysts' expectations, which is spooking investors and feeding fears of an AI bubble. Meta, Alphabet, Oracle, Amazon and Microsoft have committed to spending $800bn between them in 2026. The Nasdaq ended October with its worst monthly slide since March 2025.

Alphabet took the first big hit. On Thursday its shares plunged 12%, removing more than $500bn (£374bn) of market value, after it revealed that the AI summaries it now shows as the top answer to search queries were affecting its core search advertising revenue. On Friday the stock slipped another 1.4%. Alphabet expects to spend up to $205bn this year on investments, almost entirely related to AI.

The bigger losses on Friday came at Intel, whose shares plummeted 28%, shedding more than $130bn in value. The chip maker said it planned to increase spending on AI even as demand weakens for computers, a major source of demand for its microprocessors. On Thursday finance chief David Zinsner said Intel did not expect to bring in more cash than it spent this year and forecast lower-than-expected revenue for the fourth quarter. In the third-quarter earnings report he said: "Looking ahead, we see the PC slowdown continuing at least through the first half of next year." On the earnings call he added that Intel had significantly ramped up equipment investment in the third quarter and expected that to be "even more significant" in the following three months.

Amazon revealed on Thursday that it had spent more cash than it was making, and that this spending had increased six-fold over the span of three months. The company has committed to spending $220bn this year on AI data centres, network equipment and servers. Its shares recovered some overnight losses but were still down 1.4% at the end of Friday trading. Reddit stock plunged 29% after the platform reported weaker-than-expected daily user figures and warned that Google's growing AI-driven search was hurting referral traffic. Online game platform Roblox fell 18% as its daily active user numbers dropped. Microsoft was among the firms that reported earnings this week, and analysts said there were questions about the payout from the huge AI investments.

Chris Low of investment management firm FHN Financial said much of the market reaction was to the biggest players such as Amazon and Google. He told Reuters the companies were "showing some pretty significant growing pains as they aggressively pursue the AI build-out". The BBC's text then adds: "The thinking is that these signs suggest that the entire sector is going to slow down."

The bubble worry, as the BBC describes it, is that some tech firms will not justify their sky-high valuations because the cost of building AI data centres and developing the software will end up exceeding the money they can make from it. Kathleen Brookes, research director at trading firm XTB, said: "Investors have turned ruthless, punishing any signs of disappointment in [third quarter] earnings." She added that investors now want payback, with Alphabet and Intel in the crosshairs.

The picture is not uniformly bleak. Values for many of these companies remain well above where they were a year ago. The Nasdaq closed 2.8% lower but is up 7.8% over the last year; Amazon is up nearly 8% over 12 months, while Alphabet is down 1.3%. Brookes noted that November is typically a strong month for stocks, but said that if AI stocks keep struggling in the coming days, it could suggest the AI trade is past its peak and investors will look for a new theme to drive markets.

Key facts

Intel shares plummeted 28% on Friday, shedding more than $130bn in value, after it said it would raise AI spending despite weaker PC demand and forecast lower-than-expected fourth-quarter revenue.
Alphabet fell 12% on Thursday, losing more than $500bn in market value, after saying AI summaries atop search were affecting its core search advertising revenue; it slipped another 1.4% on Friday.
Meta, Alphabet, Oracle, Amazon and Microsoft have committed to spending $800bn between them in 2026; the Nasdaq had its worst monthly slide since March 2025.
Amazon said it had spent more cash than it was making, with spending up six-fold over three months and $220bn committed this year; Reddit fell 29% and Roblox 18%.
Many of these stocks remain well above year-ago levels: the Nasdaq is up 7.8% over a year despite closing 2.8% lower.

Why it matters

Two things collided in one week: huge AI spending commitments and earnings that did not always meet expectations. Alphabet's disclosure is the sharpest example, because it linked AI summaries in search to pressure on its core search advertising revenue. Intel's case is different but points the same way: it plans to spend more on AI while PC demand, a major source of demand for its processors, weakens. The BBC frames the result as rising fears of an AI bubble, where building data centres and software costs more than the AI earns.

Who it affects

Shareholders of the large US tech companies felt it first: Alphabet, Intel, Amazon, Reddit and Roblox all fell, and the Nasdaq ended October with its worst month since March 2025. Reddit's drop was tied to Google's AI-driven search hurting referral traffic, so sites that depend on search traffic are also in the picture. The five companies committed to $800bn of 2026 AI spending (Meta, Alphabet, Oracle, Amazon, Microsoft) are the ones investors are now scrutinising.

How to use it

This is a market-watch story rather than a product you can adopt. The useful reading is what to track next: whether AI stocks keep struggling in the coming days, which XTB's Kathleen Brookes says could suggest the AI trade is past its peak, and how companies describe the return on their AI spending in earnings reports. She also noted that November is typically a strong month for stocks.

How solid is it

The figures come from a BBC report that cites company disclosures and named analysts (Chris Low of FHN Financial, who spoke to Reuters, and Kathleen Brookes of XTB). Share-price moves, market-value losses and spending commitments are stated plainly. The reading of the cause, that earnings are spooking investors and creating bubble fears, is the BBC's own framing and the analysts' view, not a measured fact. The article does not state the day on which the Nasdaq's 2.8% decline occurred.

Risks and caveats

Two days of falls do not make a bubble, and the article does not say one has burst or predict a crash. Brookes only says continued struggles could suggest the AI trade is past its peak. Many of these stocks are still well above where they were a year ago: the Nasdaq is up 7.8% over 12 months and Amazon is up nearly 8%, though Alphabet is down 1.3%. The headline on the BBC page speaks of AI spending nearing $1tn; the only combined spending figure in the text is $800bn for five companies in 2026.

“The AI trade has had a good run in recent years, but now investors want payback, and companies like Alphabet and Intel are in the crosshairs.”

— Kathleen Brookes, research director at trading firm XTB