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Amazon and Intel shares were down in premarket trading on Friday after they reported September quarter numbers that disappointed investors, dragging Nasdaq futures down 2% and capping off a week of rough tech earnings.
Amazon shares were down 7% in premarket trading, while Intel was down 25%.
Amazon reported a third-quarter miss on the top and bottom line while maintaining its capital expenditure forecast for 2026 of $220 billion this year. Amazon also reported negative free cash flow for the second consecutive quarter, much larger than the previous period.
Intel issued weaker-than-expected guidance, citing ongoing softness in the PC market.
Chip stocks including Micron, Nvidia and Arm were lower in premarket trade in the U.S., while major European semiconductor names, including ASML, saw sharp declines.
Nasdaq Composite Index over the last 5 days.
A tough week for tech earnings
Investors are nervous about the massive AI spending from the tech giants and whether that will pay off.
On Thursday, Alphabet shares closed 13% lower, its worst single-day drop in history after it too reported ballooning negative free cash flow.
Microsoft shares rose after it remained cash flow positive in the September quarter.
Nasdaq-100 futures were down 2% in early trading as tech stocks remained under pressure, which could put the tech-heavy index into negative territory this week. Even with the recent fall, the Nasdaq Composite index is up more than 12% year-to-date as of Thursday’s close.
“I don’t think this is a moment of reckoning but I think it’s a moment where investors should take a long thought about how positioning across the space still remains crowded even though the fundamentals are strong,” Matt Orton, chief market strategist at Raymond James, told CNBC’s “Squawk Box Europe” on Friday.
“While the here and now can be painful … the fact of the matter is the fundamentals by and large still remain in place, especially across the AI capex beneficiary part of the market.”
Orton said he is “generally okay” with these companies turning free cash flow negative as it’s for a “temporary period.”