US tech stocks slide on AI cost fears as Intel falls as much as 30%

US technology shares continued to slide as concerns intensified over the rising costs of building out artificial intelligence (AI) infrastructure. Shares in chip maker Intel extended their overnight fall into early trading on Friday, dropping as much as 30%.

Behind the fall was Intel's latest earnings update. The company warned of a weaker computer market even as it plans to increase spending on AI, a combination of messages that rattled investors.

Intel's finance chief David Zinsner said in the company's third-quarter earnings report on Thursday that the firm did not expect to bring in more cash than it spent this year, and forecast lower-than-expected revenue for its fourth quarter. "Looking ahead, we see the PC slowdown continuing at least through the first half of next year," he said.

Zinsner also said the firm had significantly ramped up investment in equipment in the third quarter and expected that to be "even more significant" in the following three months. After the update rattled investors, Intel was on track to lose more than $130bn in market value.

Shares in online retailer Amazon fell as far as 6% before recovering, after its earnings reported on Thursday evening fell short of investors' expectations.

The tech-heavy Nasdaq exchange opened on Friday at its lowest level in more than two months, down 2.5%, as other tech stocks including Reddit and Roblox continued to fall.

For Google owner Alphabet, the hit had come the previous day. Its value plunged by more than $500bn on Thursday after it revealed its own AI summaries were affecting its core search advertising revenue, and its stock continued to fall in early trading on Friday, down a further 1%.

Shares in social media platform Reddit were down 26% after it revealed weaker-than-expected daily user figures and warned that Google's growing AI-driven search was hurting referral traffic. Stock in online game platform Roblox also fell by nearly 20%, as its daily active user numbers dropped.

Several major tech firms, including Microsoft, have reported earnings this week, and analysts said there were questions about the payout from the huge investments in AI.

Chris Low, from investment management firm FHN Financial, told Reuters that the bulk of what was happening in the stock market was in reaction to some of the biggest tech players such as Amazon and Google. He said the companies were "showing some pretty significant growing pains as they aggressively pursue the AI build-out", and that these signs suggested the entire sector was going to slow down.