AI Cash Burn Drives Market's Sharpest Drop

Intel shares fell 28.6% on Friday, the chipmaker's steepest single-day decline since 1974, after it issued a fourth-quarter profit forecast that trailed analyst estimates. The drop came even as the company posted a stronger third-quarter profit than analysts had projected. Chief executive Lip-Bu Tan told investors the personal-computer industry continues to feel pressure.

The slide in Intel shares accompanied a broader technology retreat. The S&P 500 fell 140.32 points to close at 7,580.07, its worst session since June, and notched a third straight losing week. The Nasdaq composite dropped 747.73 points to 25,437.00, while the Dow Jones Industrial Average shed 572.25 points to 51,770.31.

The selloff traces back through the week. Alphabet's stock fell more than 12% on Thursday, its worst day on record, after the company told investors it burned through more cash during the summer than the spring while funding artificial-intelligence infrastructure. Amazon reported a $42.4 billion cash outflow over the prior 12 months, measured as free cash flow, and spent $94.8 billion on property and equipment, primarily for artificial-intelligence investments. Amazon shares fell 1.4% after the company posted a weaker summer profit than analysts expected.

Nvidia declined 4.2% on Friday, the heaviest single drag on the S&P 500, outweighing Intel's weight in the index. Joe Tigay, a portfolio manager at Equity Armor Investments, wrote in a note to investors: "We're moving out of the hopes and dreams phase of the AI trade and into the 'show me' phase." The S&P 500 remains 3.1% below its record close earlier in October.

Bitcoin traded below $77,000 on Friday, down from more than $86,000 earlier in the month, after a hack hit Binance. A U.S.-based blockchain intelligence firm said a North Korean unit was likely behind the attack, which affected more than $6 billion worth of crypto at the exchange. Coinbase Global shares fell 10.6% despite reporting a stronger third-quarter profit than analysts expected. Strategy, which says it holds about 4% of bitcoin's total supply, dropped 7.8% and said its chief financial officer will resign next week for personal reasons.

Treasury yields eased as investors moved into government bonds. The 10-year yield settled at 4.93%, down from 4.98% late Thursday and from more than 5.30% earlier in the month. Oil moved the other way: Brent crude rose 2.4% to $113.43 a barrel, near the top of its range since the war with Iran lifted prices.

Shares outside technology held up better. Nearly as many S&P 500 constituents rose as fell. ExxonMobil added 2.2% and Chevron gained 1.8% after both reported stronger summer profits than analysts expected. Mondelez International rose 3.9%, and Colgate-Palmolive climbed 2.3%.

The Bank of Japan kept interest rates steady on Friday, following rate decisions earlier in the week from the Federal Reserve and the European Central Bank. Japan's Nikkei 225 fell 2.1%, South Korea's Kospi dropped 3.5%, and Hong Kong's Hang Seng rose 1.5%. U.S. midterm elections are scheduled for Tuesday.