Amazon burns cash, Intel flags weak PC demand as AI boom's costs ripple across markets

NEW YORK: Wall Street's concerns over the cost of the artificial intelligence (AI) boom escalated after the market closed on Thursday, as results from Amazon and Intel showed that the infrastructure race was not only straining the technology industry but also affecting consumers.

Surging data centre spending, highlighted by Amazon's massive cash burn, has turned once debt-light technology giants into major borrowers, while price increases are squeezing global demand for devices such as smartphones and personal computers (PCs).

Amazon forecast holiday-quarter sales below Wall Street expectations, potentially signalling growing pressure on consumers as inflation picks up. This also affected Intel's PC business, as a memory chip shortage drove up its costs.

The AI spending spree is also eating into the once-enviable cash flows of major technology companies. Alphabet and Meta both burned cash in the September quarter, while Microsoft, the only exception, joined their borrowing spree with a US$25 billion debt sale on Thursday.

The technology giants have deep pockets to sustain their spending, but investors have grown increasingly wary of smaller AI cloud firms borrowing heavily to meet enormous order backlogs.

Amazon's shares fell 7 per cent in after-hours trading, accompanied by losses of between 5.8 and 6.7 per cent in AI cloud stocks CoreWeave, Nebius and Iren. Alphabet, which closed regular trading nearly 13 per cent lower, fell another 1.5 per cent after hours.

The semiconductor index also fell after the market closed after Intel cited "near-term headwinds across the PC industry". The index had already dropped 1.4 per cent during the regular session following Alphabet's disappointing earnings report.

Shares of PC makers HP and Dell fell 8 per cent and 6.8 per cent, respectively.

"The revenues missed due to lower PC demand and forward guidance also disappointed. As Google learned today, earnings matter," said Kim Caughey Forrest, founder and chief investment officer at Bokeh Capital Partners LLC.

Alphabet, Google's parent company, fell 13 per cent on Thursday.

INTEL FACTORY SHUTDOWN

Intel, whose shares fell 18 per cent, also said a factory explosion in Israel had caused a two-week shutdown and would cost it about US$600 million in lost revenue over two quarters.

"Overall semiconductor weakness after hours is primarily a function of Intel guide and negative sentiment spillover," said Michael James, equity sales trader at Rosenblatt Securities.

Some analysts said Intel's problems in the PC sector, an area of technology that does not attract the same scrutiny on Wall Street as the AI buildout, did not necessarily point to major problems for other chipmakers with greater exposure to AI.

Nevertheless, investors in the less-active after-hours market appeared to react first and ask questions later. AMD fell 4 per cent and Broadcom declined 2 per cent.

Among the biggest losers in the volatile session was the Direxion Daily Semiconductor Bull ETF, which offers investors three times the daily performance of the Philadelphia Semiconductor Index (SOX), and fell 9 per cent.

The SOX has been one of 2026's standout performers, rising more than 60 per cent as shortages of chips and equipment needed for the AI buildout drove up prices and profits at companies ranging from Nvidia and memory chipmaker Micron to Marvell Technology.

However, the momentum of the trade has been tested over the past month by tighter financing conditions. This has kept some anticipated initial public offerings (IPOs) on the sidelines and put some highly leveraged AI infrastructure firms under pressure.

The SOX has declined 13 per cent since hitting its recent high in October and is down 21 per cent from its all-time high in June.

"I think Intel was seen as this unicorn within the tech sector because it was seen as being weaker compared to Nvidia and AMD," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

"It just had this miraculous rise, and you got a lot of retail money into it, and some of that money is easy come, easy go."