Global Chip Stocks Plunge as Intel, Tech AI Spending Spook Investors

Global chip stocks tumbled Friday after Intel’s (INTC) layoffs plan and fears of overspending on artificial intelligence (AI) by the tech industry unnerved investors.

Intel shares are plunging 24% in premarket trading on the back of a litany of bad news. The chipmaker reported everything from a wider-than-expected second-quarter loss to a grim growth forecast, a dividend halt plan, and a $10 billion turnaround that includes cutting 15% of its workforce.

Shares of Dutch semiconductor-gear maker ASML Holding (ASML) are falling 6%, and American depositary receipts (ADRs) of British chip designer Arm Holdings (ARM) and Taiwan Semiconductor Manufacturing Company (TSM), the world’s largest contract chip maker, are both dropping 5%.

In Japanese trading Friday, Tokyo Electron, which makes 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 falling about 10% in premarket trading after the tech titan’s third-quarter revenue outlook fell short of analysts’ estimates and ramped up spending on AI initiatives. Amazon spent $17.62 billion in Q2 purchases of property and equipment, a 54% jump from a year ago.

Apart from Facebook parent Meta Platforms (META), investors have sold off the delivery giant’s Magnificent Seven peers like Microsoft (MSFT) and Google parent Alphabet (GOOGL) for perceived overspending on the technology and sparked a tech selloff. Meanwhile, another AI investor favorite, Nvidia (NVDA), is down 5%.