by Coinstrooper Crypto Articles
Quick Take
  • Intel collapsed nearly 29% on Friday, Reddit fell 29%, and Google parent Alphabet lost more than $500 billion in market value on Thursday alone.
  • China’s AI bubble burst last week, crashing most of its tech stocks.
  • The immediate trigger was disappointing corporate earnings.
  • Several major technology companies revealed how much money they were spending on AI, while others warned of slowing growth.

What Happened

Wall Street ended October with a brutal selloff, wiping roughly $2 trillion from the Nasdaq-100’s market value as investors questioned whether the artificial intelligence boom could justify its enormous costs.

Investors were already nervous about elevated stock valuations. Growing inflation and indications that the Fed will increase interest rates in December added pressure.

Alphabet shares lost nearly 13% during the week after its quarterly results disappointed investors.

Investors are now questioning how quickly Google’s enormous AI investments will generate enough cash to justify their cost.

Investors increasingly fear AI could undermine parts of the traditional software business.

Market Context

The damage was concentrated in technology stocks. Intel collapsed nearly 29% on Friday, Reddit fell 29%, and Google parent Alphabet lost more than $500 billion in market value on Thursday alone.

Why Did the US Stock Market Crash?

The company expects capital expenditure of approximately $220 billion this year, with even more spending anticipated in 2027.

Meanwhile, rising memory prices weakened PC demand. Intel’s fourth-quarter revenue forecast fell substantially below Wall Street expectations, triggering its steepest daily share-price decline in decades.

Why It Matters

The company reported $9.1 billion in negative free cash flow as AI infrastructure spending accelerated. Its core search advertising business also missed expectations.

An explosion at its Israeli manufacturing facility disrupted production, with an estimated $600 million revenue impact over two quarters.

Enterprise software companies suffered their own selloff. ServiceNow fell approximately 34% for the week following disappointing earnings and a weaker backlog-growth outlook. Cybersecurity company Fortinet lost around 24% after cutting its services-revenue forecast.

Details

China’s AI bubble burst last week, crashing most of its tech stocks. Is the same pattern now unfolding on Wall Street?

The immediate trigger was disappointing corporate earnings. Several major technology companies revealed how much money they were spending on AI, while others warned of slowing growth.

Google: AI Spending Is Eating Into Cash

Amazon: $220 Billion in Spending

Amazon faces a similar problem.

Despite AWS cloud revenue growing 39%, Amazon reported negative free cash flow of $42.4 billion over the preceding 12 months.

Intel: A Factory Disaster and Falling Demand

Intel’s collapse had more immediate causes.

Reddit and Software Stocks: AI Threatens Existing Businesses

Reddit lost more than 36% over the week after warning that Google’s AI-generated search answers were reducing traffic to its platform.

Is the AI Bubble Starting to Burst?

There are credible warning signs.