Tech rout deepens as US earnings stoke AI spending fears

{"text":[[{"start":11.734,"text":"US tech stocks sank sharply on Friday as disappointing earnings from Amazon and Intel intensified investors’ fears over the sustainability of the AI boom."}],[{"start":22.36,"text":"The Nasdaq 100 dropped 2.6 per cent at the Wall Street open, following a $500bn rout in Alphabet shares on Thursday that sent the tech-heavy index down 1.4 per cent. The S&P 500 lost 1.2 per cent in early trading."}],[{"start":38.2,"text":"Amazon shares sank 5.5 per cent after it posted weaker than expected sales in results after the market closed on Thursday, while downbeat forecast from chipmaker Intel also had a chilling effect on sentiment, with the company’s shares tumbling 26 per cent."}],[{"start":54.6,"text":"“The combination of deteriorating cash flows and rising capital commitments means the debate over whether AI returns can ultimately justify the scale of investment may not be resolved any time soon,” said Emmanuel Cau, head of European and Apac equity strategy at Barclays."}],[{"start":70.4,"text":"“The direction of travel into next year should naturally be towards slower earnings growth” from the big technology companies, Cau added."}],[{"start":79.24,"text":"Investors’ growing anxiety over the AI boom also hit Asian tech stocks earlier on Friday, with Japan’s tech-heavy Nikkei 225 index closing down 2.1 per cent. OpenAI investor SoftBank fell 6 per cent, taking its losses from its June peak to 48 per cent."}],[{"start":96.28,"text":"“The major tech names are entering a no man’s land where they become uninvestable,” said Neil Newman, Japan equity strategist at Astris Advisory in Tokyo. “When heavyweights like SoftBank halve in value over a few months, it is neither a buy nor a sell. Investors will want to simply keep out of the way.”"}],[{"start":114.74,"text":"Samsung Electronics and SK Hynix, the two biggest memory-chip makers, slid 3 per cent and 7.1 per cent respectively, taking South Korea’s Kospi index 3.5 per cent lower."}],[{"start":126.48,"text":"In Europe, chipmaking giant ASML was down 5.7 per cent and a basket of the region’s technology stocks was 2.3 per cent lower."}],[{"start":null,"text":"

"}],[{"start":135.08,"text":"Concerns about AI spending have grown as profitable companies such as Google plough their free cash flow into capital expenditure and increasingly turn to public markets to raise more funds."}],[{"start":146.22,"text":"Shares of Google parent Alphabet tumbled 13 per cent on Thursday, wiping a record $500bn from its market value after the company reported a second straight quarter of cash burn and revealed “AI mode” searches were threatening its core advertising business."}],[{"start":161.76,"text":"“Expectations built into [tech share] prices are being challenged and are now resetting,” said Hank Calenti, global markets strategist at SMBC. “The weakness is due to a combination of some firms not earning as much as expected and others spending more on capex than forecast.”"}],[{"start":178.44,"text":"Thursday’s declines meant that among the so-called Magnificent Seven tech stocks, only three — Apple, Microsoft and Nvidia — were up year to date. Alphabet, Amazon, Meta and Tesla were in negative territory."}],[{"start":192.08,"text":"“The market is questioning a lot more the pace of implementation of capital expenditure and bottlenecks are becoming clearer,” said Ecaterina Bigos, senior market strategist at BNP Paribas Asset Management."}],[{"start":203.76,"text":"TSMC, the world’s largest contract chipmaker, declined 1.9 per cent and Japan’s Kioxia tumbled 7.1 per cent."}],[{"start":213.12,"text":"Shares of Fujitsu, which has positioned itself as an AI infrastructure provider, plunged 16.2 per cent after its second-quarter results on Thursday disappointed investors. Tokyo Electron, the wafer-fabrication equipment producer, shed 5.2 per cent."}],[{"start":228.72,"text":"Higher oil prices on Friday also weighed on risky assets like stocks. The international benchmark Brent crude climbed to its highest since April at $118 a barrel as investors feared looming escalation in the US-Iran conflict."}],[{"start":243.24,"text":"Despite higher energy prices threatening to fuel inflation, government bonds rallied as investors sought relative safety from the AI sell-off."}],[{"start":251.16,"text":"The yield on 10-year US Treasuries was 0.06 percentage points lower at 4.93 per cent, as the price of the bonds rose. In Germany, 10-year Bund yields fell 0.03 percentage points to 3.33 per cent."}],[{"start":265.16,"text":"The dollar was also lower as tech stocks sold off, losing 0.2 per cent against a basket of major currencies."}],[{"start":276.82,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793369439_9811.mp3"}