Nasdaq sinks 2.6% as Intel plunges 29% and AI spending fears spread

Intel led the drop: Intel shares fell about 29%, on pace for their worst day since 1974, CNBC and AP reported. The chipmaker forecast fourth-quarter revenue of $15 billion to $16 billion, below the $17.07 billion analysts expected, according to LSEG data cited by Reuters, and its finance chief, David Zinsner, said Intel does not expect positive cash flow this year. Zinsner said he sees the PC slowdown continuing at least through the first half of next year, BBC reported. Higher memory prices, as suppliers shift capacity to AI chips, are raising PC costs and weighing on demand, Reuters reported.

Who else fell: The selloff spread across chips and AI hardware. Nvidia was down 3.7%, AMD about 10% and a broad chip-stock index 7%, while server makers Dell and HP fell 10.4% and 8.7%, Reuters reported. Amazon was down about 2% after its earnings miss, and Alphabet slipped further after its record 12.6% drop on Thursday. Reddit fell 26% and Roblox nearly 20%, BBC reported. Coinbase fell 13% after a $6.3 billion theft at the crypto exchange Binance.

How this week's AI report cards compare: Microsoft reported 48% growth in Azure, its cloud business, and capital spending that came in below forecasts; its finance chief, Amy Hood, said 'we still have demand that exceeds supply,' Fortune reported. Alphabet and Amazon, by contrast, both showed AI spending outrunning the cash their businesses bring in, and Intel added a weak PC outlook on top of heavy factory spending. Apple reports its results on Monday.

The strongest case that this is a warning sign: 'It's really been a horror show this morning and the real villain is AI spending,' Gene Goldman of Cetera told Reuters. Bank of America, UBS, Bernstein, Wells Fargo and Barclays all cut their Intel price targets, and D.A. Davidson downgraded the stock in a note titled 'Not fixed yet,' CNBC reported.

The strongest case that it's an overreaction: Demand for AI computing is still running ahead of supply, Microsoft says. Some analysts described Friday's move as broad selling rather than fresh bad news for every company. 'The market is in a sell first, ask questions later mood right now,' said Matt Britzman of Hargreaves Lansdown, adding that Intel's warning gave investors 'an easy excuse to take some money off the table across chip stocks,' Reuters reported.

What's still unknown: These are midday figures, and closing levels may differ. It's not yet clear whether the selling spreads beyond tech next week, which also brings Apple's results and the Nov. 3 midterm elections. Rising oil prices added pressure: Brent crude rose about 2.4% to roughly $117.60 a barrel after a tanker was damaged in the Strait of Hormuz, CNBC reported.

Index levels and stock moves are intraday figures from AP (about 12:30 p.m. ET) and Reuters (11:52 a.m. to 12:09 p.m. ET) and will change by the close. Intel's 29% drop and 'worst day since 1974' are from CNBC and AP; Reuters described it as on track for the sharpest one-day decline. The $12 billion drop in the government's Intel stake is CNBC's estimate. The hero photo shows the Nasdaq studio in 2015, not Friday's trading. Not investment advice.