Tech giants' spending spooks investors as bonds rally
SPY•Tech shares fell as investors questioned whether rising AI spending will deliver sufficient returns, while US Treasury prices surged. Amazon fell 7% after hours, Intel dropped 23%, and Alphabet lost $500 billion in market value after its shares fell 12.6%.
1. AI spending weighs on shares
US tech shares slumped on Friday, with Nasdaq 100 futures pointing to a fall of more than 2%. Amazon shares dropped 7% and Intel shares 23% after hours following results showing cash burn, while Alphabet shares fell 12.6% on Thursday and slid further after hours as its AI spending turned cash flow negative.
2. Bonds rally as yields fall
The 10-year US Treasury yield fell about 7 basis points to 4.92%, putting it on track for its largest monthly drop since December 2023. Investors were also concerned that spending on AI infrastructure may not generate sufficient returns and that higher prices for devices could squeeze demand.
3. Other market moves
The Bank of Japan held rates steady and announced plans to accelerate exchange-traded fund sales next year. Oil rose about 2% as an attack on a tanker in the Strait of Hormuz highlighted supply risks, while bitcoin hit a six-week low before trading 1.1% lower at $77,876.
