Nasdaq Plunges 3% as AI Spending Fears Ignite Broad Selloff
A wave of disappointing earnings and cautious guidance from tech heavyweights sparked a sharp selloff in US stocks on Friday, with the Nasdaq Composite tumbling 3% and the Nasdaq 100 and S&P 500 collectively shedding nearly $3.3 trillion in market value. The rout was fueled by investor anxiety over whether the massive artificial intelligence buildout will ultimately pay off. Weak guidance from Intel, Amazon’s soaring cash burn, and a slide in Alphabet shares prompted a broad reassessment of AI-related valuations, hitting chipmakers and other AI-adjacent stocks particularly hard.nnThe selloff intensified as investors digested comments from Intel CEO Lip-Bu Tan, who highlighted supply chain issues that contributed to the company’s lackluster quarterly performance. Meanwhile, Amazon’s earnings call revealed plans for approximately $220 billion in capital expenditures for 2026, with the majority allocated to AWS, and expectations to spend meaningfully more in 2027. While Amazon remains committed to its cloud and AI infrastructure, the sheer scale of spending raised concerns about near-term profitability. Alphabet’s shares also continued their decline from Thursday, adding to the bearish sentiment. “The market reaction to these key updates and the overall effect this has had on the chip sector and other AI-adjacent stocks this morning is concerning,” wrote one analyst in a client note. “Not only does it show that upside momentum has waned significantly, but that intermediate support levels are creaking dangerously.”nnThe tech sector saw some of the most notable moves, with semiconductor stocks bearing the brunt of the selling. The volatility comes at a sensitive time, with midterm elections approaching—a period when stocks historically struggle. “Investors may be mostly passive investors nowadays, but their mood seems to follow the trend of individual stocks, plenty of which have been struggling even as the indices trade much closer to all-time highs,” said Paul Hickey, co-founder at Bespoke Investment, commenting on weaker investor sentiment. The disconnect between index performance and individual stock struggles suggests underlying fragility in the market.nnAs the AI narrative faces its first major test, investors are questioning whether the enormous capital expenditures will generate sufficient returns. With Amazon’s 2026 spending plans and Intel’s supply chain woes underscoring execution risks, the market is demanding more concrete evidence of AI monetization. The coming
Shimanta Das 
