Nasdaq 100 futures drop 2.2% after Amazon, Intel rattle tech sector
Nasdaq 100 futures fell about 2.2% after Amazon flagged heavier cash burn and higher planned spending, while Intel warned it expects negative cash flow this year, renewing doubts about AI investment payoffs.
Amazon stock fell 7.2% in premarket trading after the online retailer reported a large cash outflow for the third quarter and said capital spending would increase again next year. Market participants read the update as another sign that the cost of building out AI infrastructure keeps outpacing the income it currently brings in.
Intel sank 25% before the bell after warning it foresees burning through cash this year, pointing to soft personal-computer demand, manufacturing hiccups and heavy outlays to boost production. The warning pulled other chip names lower as well: Nvidia slipped 2.5%, AMD lost 7%, and Broadcom dropped nearly 4%. If those early declines held, Amazon and Intel combined stood to lose close to $300 billion in market value.
Alphabet shares slipped a further 0.9%, extending a drop that started a day earlier after weaker-than-expected search advertising revenue and a jump in cash outflows. Meta Platforms also disclosed cash burn for the third quarter, and Microsoft sold $25 billion in bonds on Thursday to help fund its AI buildout, underscoring how much of the industry’s expansion is now being financed with borrowed money.
Based on LSEG data, traders are now pricing in Fed rate increases totaling more than 50 basis points by the middle of 2027, even though the central bank left rates unchanged this week. Analysts interpreted the decision as a possible pause rather than the end of the current policy cycle, with expectations of another rate increase as early as December — a move that would raise borrowing costs tied to AI-related projects.
Separately, Reddit stock sank over 21% after chief executive Steve Huffman indicated that daily active user counts could fall by a low double-digit percentage in the fourth quarter.
At roughly 4 a.m. Eastern time, Dow futures were down slightly, by about 0.05%, while S&P 500 futures declined close to 1%. The Nasdaq remained on pace for a weekly gain but was set for a monthly loss after two straight months of gains, while the S&P 500 and Dow were still positioned to end the month higher.
Why it matters: Renewed concerns over AI capital spending and financing costs are pressuring Nasdaq futures and chip stocks, with knock-on risk for broader US equities if expectations for further Fed tightening build, influencing sentiment across tech-heavy portfolios and the dollar as rate bets shift.
Source: Economic Times Markets