The after-hours moves pointed to a weak start for Nasdaq futures in Asia, with semiconductor and AI infrastructure names most exposed in regional trade, including Asian chip and hardware suppliers. The funding angle may matter more than the earnings misses. Rising Big Tech debt issuance and pressure on leveraged AI cloud firms tie directly into concerns about tightening financial conditions and AI-related credit supply. If the selling deepens, investors may rotate toward the AI chip leaders that analysts see as less exposed to PC weakness, rather than out of the sector entirely.
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Earlier:
- Amazon Q3 operating profit beats estimates, but EPS misses and Q4 guidance looks soft. Share price drops.
- Intel beats Q3 profit forecasts, but weak Q4 guidance and PC outlook weigh. Share price drops.
- Intel shares tumble around 15%. The narrative is –> weak Q4 guidance overshadows Q3 profit beat
- Earnings bloodbath: Intel crashes over 22%, Amazon over 12%. What’s coming next?
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The AI build-out is starting to send its bill to everyone, from Big Tech’s balance sheets to the shoppers paying more for their next laptop.
Summary:
- Amazon fell about 7% after hours on a below-forecast holiday-quarter sales outlook
- Intel dropped around 18% on weak PC demand and disclosed a $600 million revenue hit from an Israel factory explosion
- AI cloud stocks CoreWeave, Nebius and Iren fell 6% to 7%, while HP and Dell sank about 8% and 7%
- Alphabet and Meta burned cash in the September quarter, and Microsoft launched a $25 billion debt sale
- Some analysts say Intel’s PC woes don’t necessarily signal trouble for AI-focused chipmakers
- The semiconductor index is 21% below its June record despite a 60%-plus gain this year
Concern over the cost of the artificial intelligence boom intensified after the US market close on Thursday, Reuters reported. Results from Amazon and Intel suggested the race to build AI infrastructure is weighing not only on technology companies but also on consumers.
Amazon shares fell about 7% in after-hours trading after the company forecast holiday-quarter sales below Wall Street expectations. Reuters said that could signal growing pressure on consumers as inflation picks up. Intel dropped around 18% after flagging near-term weakness across the PC industry, where a shortage of memory chips has pushed up costs and price increases are squeezing demand for devices.
The selling spread well beyond the two companies. AI cloud providers CoreWeave, Nebius and Iren fell roughly 6% to 7% after hours. Alphabet, which had already closed nearly 13% lower following its own results, slipped a further 1.5%. PC makers HP and Dell dropped about 8% and 7%, respectively. In chips, AMD lost 4% and Broadcom 2%. A leveraged exchange-traded fund that offers three times the daily return of the Philadelphia Semiconductor Index fell 9%.
Reuters highlighted a broader shift in how the largest technology firms are funding their spending. Heavy data centre investment has turned once debt-light companies into major borrowers. Alphabet and Meta both burned cash in the September quarter. Microsoft, the only one of the group not to do so, launched a $25 billion debt sale on Thursday. The biggest companies can sustain that spending, but investors have grown more cautious about smaller AI cloud firms borrowing heavily to meet large order backlogs.
Intel also disclosed that an explosion at a factory in Israel forced a two-week shutdown. It expects the incident to cost about $600 million in lost revenue over two quarters.
Not everyone sees Intel’s PC troubles as a warning for the wider sector. Some analysts said weakness in personal computers does not necessarily signal problems for chipmakers more closely tied to AI. One trader attributed most of the after-hours chip selling to sentiment spilling over from Intel’s guidance.
The semiconductor index has risen more than 60% this year on shortages of AI-related chips and equipment, but tighter financing conditions have tested that rally over the past month. The index is down 13% from its October high and 21% below its June record.
This article was written by Eamonn Sheridan at investinglive.com.