US technology stocks fell for a second consecutive session on Friday, extending a rout that has erased hundreds of billions in market value since Alphabet disclosed that its AI-generated search summaries are cannibalizing the core advertising business. The Nasdaq dropped more than 3.5 percent as investors reassessed whether the sector's projected $800.6 billion in combined 2026 AI spending from Meta, Alphabet, Oracle, Amazon and Microsoft can ever generate sufficient returns.
Intel leads the decline
Intel shares plunged as much as 30 percent, putting the chipmaker on track to shed more than $130 billion in market capitalization. The slide followed a third-quarter report in which finance chief David Zinsner said the company would not generate positive free cash flow this year and forecast fourth-quarter revenue below expectations. He added that the PC slowdown would persist at least through the first half of 2026 and that equipment investment, already ramped up significantly in the third quarter, would be even larger in the current period.
Alphabet's search economics shift
Alphabet shares slipped another 2.2 percent in early Friday trading after Thursday's 12 percent collapse wiped out more than $500 billion in value. The catalyst was the company's admission that AI overviews now sitting atop search results are reducing click-through rates on traditional ads. At the same time, Alphabet guided for up to $205 billion in 2026 capital expenditure, almost entirely directed at AI infrastructure.
Amazon and Reddit feel the pressure
Amazon shares fell as much as 6 percent overnight after the retailer reported earnings below estimates and disclosed that cash outflows exceeded inflows, with spending increasing sixfold over three months. The company has earmarked $220 billion for 2026 investments including AI data centers, networking gear and servers. Shares pared some losses but remained down about 1.6 percent in Friday's session.
Reddit tumbled 26 percent after warning that Google's AI-driven search is cutting referral traffic and reporting daily active users below forecasts. Roblox dropped nearly 20 percent on a decline in its own daily active user count.
The bubble debate hardens
Analysts are increasingly framing the selloff as a reckoning with the economics of the AI build-out. Chris Low of FHN Financial told Reuters the major platforms are exhibiting significant growing pains as they pursue infrastructure expansion aggressively, and that the market is pricing in a broader sector slowdown. Kathleen Brookes of XTB noted the AI trade has seen repeated sharp reversals, reflecting skepticism that current valuations can be justified if the cost of data centers and model development ultimately exceeds the revenue those assets produce.