Amazon, Intel, and Alphabet earnings miss expectations, global tech stocks fall collectively

Global tech stocks are experiencing the most concentrated collective selloff of this earnings season.

Intel plunged 23% after hours, and Amazon fell about 7.3% after hours. Nasdaq 100 futures extended losses to 2%. This is the second consecutive trading day of declines for tech stocks, as one disappointing earnings report after another accelerates the withdrawal of funds from AI-related trades.

Asia-Pacific markets were hit first. South Korea's KOSPI index fell 4.5%, and the Korea Exchange promptly triggered the SIDECAR mechanism, halting program selling; chip stocks came under particular pressure, with SK Hynix down more than 8% and Samsung Electronics down more than 5%. The Asian chipmaker index fell 1.8%. Taiwan's weighted stock index fell more than 3% in early trading; the Nikkei 225 extended its decline to 2%; the MSCI Asia-Pacific index fell 1.2% to 259.45 points.

Three main triggers: Amazon, Intel, and Alphabet take turns stumbling

Intel plunged 23% after hours because its revenue forecast fell short of market expectations. This was the largest single-stock decline of this earnings season.

Amazon fell about 7.3% after hours. The earnings report showed that third-quarter total revenue rose 12% year on year to $201.9 billion, below analyst expectations. AWS cloud revenue grew 39% to $46 billion, accelerating for the sixth consecutive quarter, but online retail sales growth fell to a three-year low, and advertising growth hit its lowest level since separate disclosure began in 2020. What worried the market even more was capital expenditure: third-quarter spending on equipment and property exceeded $77 billion, far above expectations, and free cash flow over the past 12 months was negative $42.4 billion. CEO Andy Jassy also said on the earnings call that capital expenditure will increase "substantially" further in 2027.

Alphabet, meanwhile, plunged 13% at the close of the previous trading day, the stock's largest single-day decline on record. Search advertising revenue rose 12% year on year to $63.3 billion, below the market expectation of $64.9 billion, and free cash flow was negative $9.1 billion. CEO Sundar Pichai characterized the lag in monetizing AI search as a deliberate choice, comparing the current phase to the mobile transition a decade ago: "Just as we shifted to mobile a decade ago, we are focused on building the best search user experience first, and then monetizing it." But the market was not convinced.

Anna Wu, founder of Floodlines Research and an investment strategist, said: "This earnings season has been quite difficult for AI players, with most companies being punished amid AI bubble and inflation concerns. What the market fears is not that AI demand has slowed, but that higher financing costs and credit risk may ultimately force hyperscalers to slow the pace of infrastructure buildout."

Greg Boland, market strategist at brokerage Moomoo, noted: "The broader signal from the market is that investors want more than AI promises. Tech valuations are stretched, and the market needs clearer evidence that heavy capital investment can translate into profits and cash flow. This risk-averse sentiment is spreading through tech stocks and spilling over into Asian markets."

By contrast, Microsoft reported 48% cloud revenue growth the same day, kept capital expenditure relatively restrained, and fell less than 1% on Thursday, becoming one of the few tech giants to satisfy investors this earnings season.

On Thursday, more than 400 S&P 500 constituents rose, as funds rotated from the tech sector into other industries, showing that the damage from this selloff is still mainly concentrated in tech. The Philadelphia Semiconductor Index fell 1.4% on Thursday, the Nasdaq 100 fell 1.4%, and the S&P 500 slipped only 0.3%.

Funds turn to safe-haven assets: US Treasury yields fall to a seven-week low

The tech selloff pushed funds into safe-haven assets.

The US 10-year Treasury yield fell 8.5 basis points to 4.902%, a seven-week low; the two-year Treasury yield fell 8.7 basis points to 4.5648%. Federal funds rate futures rose in tandem, and traders reduced bets on a Fed rate hike, with the market now pricing about a 70% probability of a December hike.

The cryptocurrency market was not spared either. Bitcoin fell about 2% to around $77,200. At the same time, Binance, the world's largest cryptocurrency exchange, was suspected of being hacked, and the company announced a freeze on assets totaling about $3 billion (Bloomberg previously reported more than $2.5 billion, and Binance later updated the figure to about $3 billion), sending digital token prices lower. Binance said it has not yet confirmed whether customer funds were affected.

Ian Lyngen of BMO Capital Markets commented on the current macro backdrop: "This is another round of strong economic data, showing persistent inflationary pressure and a growth divergence between AI infrastructure investment and consumption."

It is worth noting that the tech decline did not drag down the entire US stock market. On Thursday, more than 400 S&P 500 constituents closed higher, as investors rotated funds from the tech sector into other industries, and the S&P 500 as a whole fell only 0.3%. Risk warning and disclaimer

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