Global chip stocks tumbled Friday after Intel’s (INTC) layoffs plan and concerns about overspending on artificial intelligence (AI) by the tech industry alarmed investors.
Intel shares are down 24% in premarket trading due to several negative reports. The chipmaker announced a wider-than-expected second-quarter loss, a grim growth forecast, a plan to halt dividends, and a $10 billion turnaround strategy that includes cutting 15% of its workforce.
Shares of Dutch semiconductor-gear maker ASML Holding (ASML) are falling 6%, while American depositary receipts (ADRs) of British chip designer Arm Holdings (ARM) and Taiwan Semiconductor Manufacturing Company (TSM) are both down 5%.
In Japanese trading Friday, Tokyo Electron, which manufactures etching machines for semiconductor factories, closed 12% lower, and Arm majority owner SoftBank Group fell 8%.
AI Overspending Casts Cloud on Tech Industry
Amazon (AMZN) shares are down about 10% in premarket trading after its third-quarter revenue outlook fell short of analysts’ estimates amid increased spending on AI initiatives. Amazon’s Q2 spending on property and equipment surged 54% year-over-year to $17.62 billion.
Investors have sold off shares of other major tech companies due to perceived overspending on AI. Besides Facebook parent Meta Platforms (META), companies like Microsoft (MSFT) and Google parent Alphabet (GOOGL) have also seen their stocks drop. Another AI favorite, Nvidia (NVDA), is down 5%.
