Amazon and Intel slide as AI costs worry Wall Street
Amazon narrowly missed forecasts as AI spending drained its cash flow, and Intel sank on a weak outlook, deepening investor worries about the cost of the AI boom.
Amazon's third-quarter results came in slightly below Wall Street's expectations, adding to investor worries about the enormous cost of building artificial intelligence infrastructure. The company reported revenue of $201.9 billion and earnings of $1.89 per share, both a little under analysts' forecasts, and its shares fell roughly 6% to 7% in after-hours trading on Thursday.
Amazon Web Services, the company's cloud unit, beat estimates with about $46 billion in sales. But heavy spending on data centers has pushed Amazon's free cash flow into the red: it reported an outflow of $42.4 billion over the past 12 months. The company kept its plan for about $220 billion in capital spending this year, and its sales forecast for the holiday quarter came in below expectations.
Chipmaker Intel fell even harder, losing nearly a fifth of its value in late trading after its forecast for the current quarter came in well below estimates. The company pointed to near-term weakness in the PC industry, where higher memory chip prices are hurting demand, even though sales in its data center and AI unit grew strongly.
The reports came after Alphabet's mixed results sent its shares down about 13% on Thursday. Big tech companies, including Microsoft, are increasingly borrowing to pay for their AI expansion. Analysts say the giants can afford it, but investors are watching closely for signs that the spending will pay off.
This summary is original reporting by tehworldnews, written after checking the facts against several major international news outlets and official statements.