Alphabet, Amazon and Intel fell on worries about AI spending, while Ford and GM rose. A possible December rate hike adds to the pressure on your investments.
Big tech stocks had a rough week as investors worried about how much money AI is costing. Alphabet had the worst day in its history, and Intel fell even harder. At the same time, Ford and General Motors went up. It was the third straight week that the AI trade, meaning bets on AI companies, cracked.
Alphabet missed revenue estimates on Wednesday, Oct. 28. It burned roughly $9 billion of cash and plans to spend more next year. Its shares fell nearly 13% on Thursday, erasing about $482 billion in market value. Amazon reported earnings of $1.89 a share against $1.96 expected. It said its 2027 capital budget, the money it spends on buildings and equipment, will be "meaningfully more" than this year's roughly $220 billion.
Intel guided fourth-quarter revenue well below estimates and warned it will burn cash this year. Its stock dropped about 28% on Friday, its steepest one-day fall in more than 50 years. By midday Friday, the Nasdaq 100 was down 2.6%, at its lowest since early August.
The Federal Reserve held rates at 3.75% to 4% on Wednesday in a 10-2 vote. Two officials, Gov. Lisa Cook and Cleveland Fed President Beth Hammack, wanted a hike. Chair Kevin Warsh would not signal a December move. He did say, "Interest rates get in the cracks." He added that investors are becoming more selective, with credit spreads widening for certain assets.
Thursday's data pointed both ways. Third-quarter GDP growth of 3.4% beat the 3.2% forecast, but the PCE price index, a measure of inflation, rose to 3.6% from 3.4%. Traders now see a 74% chance of a December hike, down from 85% after the meeting.
Investors moved out of tech and into Treasuries, which are government bonds. The 10-year yield slipped to 4.94% and touched 4.89% on Friday, its lowest since early September. Health care stocks are up more than 10% in October while the S&P 500 is slightly lower, the sector's widest monthly lead over the index since November 2000.
Michigan's automakers rose. GM gained about 14% for the week, its biggest weekly rise since October 2025. It had jumped 5.5% on Tuesday after saying it will move its listing to Nasdaq on Nov. 17 and prepare its Lansing Delta Township plant for hybrid production. Ford rose about 5% after reporting revenue of $49.53 billion, ahead of the $46.24 billion expected, and raising the low end of its full-year profit outlook to $10.5 billion.
The material does not say how long the slide will last. Much depends on whether the Fed raises rates in December.
Tech-heavy investments may stay bumpy while AI costs and a possible December rate hike weigh on markets, so know what your funds hold.
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