Tech stocks faced selling pressure following disappointing earnings reports from major firms, amid investor concern over the massive capital expenditures fueling the artificial intelligence boom. Amazon's quarterly report missed expectations for both profit and revenue, and Intel's forecast fell short due to weak demand for PC processors and supply chain issues. Alphabet reported weaker revenue growth from its advertising and search businesses while announcing plans to increase capital expenditure.
Following these reports, Alphabet dropped more than 12% in after-hours trading, and Amazon fell more than 7% in after-hours trading, after having lost over 4% before the close. Intel dropped 23%, contributing to a day where the Nasdaq finished down more than 1%. Anna Wu of Floodlines Research stated that "This earnings season has been tough on AI players, with most getting punished against a backdrop of AI bubble and inflation fears."
Wu added that "The concern isn't that AI demand has already slowed. It's that higher funding costs and credit risk could eventually force hyperscalers to slow their build-out." In Asia, South Korean chipmaker SK hynix fell more than 7%, and rival Samsung lost 3%. Japanese semiconductor firm Kioxia shed more than 7%, while Advantest and SoftBank dropped nearly 6%.
TSMC in Taiwan lost 1.9%. The sell-off impacted broader regional markets, with Seoul diving more than 3%, and Tokyo and Taipei shedding more than 2%. Separately, Bitcoin tumbled around 5% to a one-month low of around $76,400 after crypto platform Binance reported being impacted by a major hack affecting over $6 billion in funds.
Binance posted contradictory messages on X, insisting that "user funds are completely safe" while also stating it would "cover all losses." The exchange later advised on its X account for Latin America that "the total estimated impact is around $6.3 billion." On currency markets, the yen strengthened against the dollar after the Bank of Japan held steady on interest rates and stated inflation had topped its 2% target.
