AI Spending Puts Pressure on Technology Companies
The results reported by Intel and Amazon have increased investor concerns over the high costs of investments in artificial intelligence.
Technology stocks fell further on Friday as results from Intel and Amazon heightened investor concerns over the high costs of artificial intelligence investments.
Intel shares declined after the company's fourth-quarter sales forecast came in below analysts' expectations. The company projected sales of $15 billion to $16 billion, while analysts had expected an average of $17 billion.
Amazon also reported that it had spent more than $77 billion on capital expenditures in the third quarter to meet growing demand for AI services and build data centers. This figure exceeded market expectations. Despite this, the company's sales increased by 12% to $201.9 billion.
The decline also affected other major technology companies. Amazon shares fell by 7%, while Meta shares lost 10% of their value. Alphabet's market capitalization also dropped sharply.
Investors are mainly concerned about when the billions of dollars companies are investing in AI will generate actual returns. Analysts believe technology companies also need to develop their core businesses to maintain profitability.