US tech stocks see sharp falls over AI cost concerns

US technology shares fell sharply as investors questioned whether the rising cost of building AI systems will deliver enough returns. Intel’s warning of a weaker computer market, despite increased AI spending, deepened the sell-off, while Amazon and Alphabet also came under pressure.

The Nasdaq opened down 2.5%, its lowest level in more than two months. Intel shares fell as much as 30%, putting the company on track to lose more than $130bn in value; finance chief David Zinsner said it did not expect positive cash flow this year and forecast a PC slowdown through at least the first half of next year. Amazon’s reported earnings missed expectations, while Alphabet lost more than $500bn in value on Thursday after saying its AI summaries were affecting core search advertising revenue.