Nvidia, AMD and Intel stocks plunged in pre-market trading on Thursday as Alphabet’s latest earnings raised concerns about the cost of building artificial intelligence infrastructure.
AMD dropped 3.3%, Intel lost 3.6% and Nvidia slipped 1% in early trading. Nasdaq 100 futures declined 1.22%, while Alphabet plunged more than 10% after reporting negative quarterly free cash flow of $9.07 billion.
The reaction came despite Google Cloud revenue doubling and Microsoft reporting stronger cash generation.
Investors are questioning whether the chipmakers’ biggest customers can keep spending at record rates without sacrificing profitability.
Google’s cash-flow shock unsettles semiconductor investors
Alphabet’s third-quarter capital expenditure reached $51.36 billion as it raced to build data centres and expand AI computing capacity.
Revenue rose 25% to $127.6 billion, but missed expectations, and weaker-than-forecast search advertising added to the pressure.
Google Cloud sales surged 103% to $30.71 billion, showing that demand for AI services remains strong.
Yet Alphabet’s free cash flow turned negative, partly reflecting infrastructure spending, inventory purchases and a European Commission fine payment.
That distinction matters for Nvidia and AMD, whose accelerators depend on technology giants continuing to finance huge server deployments.
Intel is also exposed through data-centre processors, although its manufacturing turnaround adds another set of risks.
“Alphabet and Microsoft were night and day,” Melissa Otto, head of research at S&P Global Visible Alpha, told Reuters.
Microsoft shares gained about 3.5% before the opening bell after stronger cash flow and encouraging cloud guidance.
Wall Street questions the cost of the AI buildout
The pressure on chipmakers began before Alphabet reported. Sherlund Partners calculated that its Silicon & Semis grouping lost 11.9% between October 9 and 23, even though analysts’ 2027 earnings forecasts barely changed.
Rick Sherlund argued in an October 25 research note that investors were increasingly concerned about debt-funded data centres and uncertain returns.
In other words, valuations have fallen faster than the market’s expectations for chip profits. Share prices can fall sharply even when analysts have not cut profit forecasts.
Morgan Stanley strategist Mike Wilson has warned that semiconductor shares could fall another 10% to 15% before finding support, reflecting worries about the cost and availability of financing.
The Federal Reserve’s decision to keep interest rates unchanged on Wednesday offered limited relief.
Traders were pricing in an 81% chance of a December increase, which would make borrowing more expensive.
Intel earnings and AMD guidance put the sell-off to the test
Intel’s quarterly results after Thursday’s closing bell will provide the next test. Analysts expect revenue of about $16.5 billion and adjusted earnings of $0.40 a share.
Wedbush expects Intel to meet or exceed forecasts but says fourth-quarter guidance, margins and 2027 investment plans will matter more. It retained a Neutral rating and $98 price target.
Intel needs to demonstrate that its manufacturing recovery can withstand weak personal-computer demand.
For AMD, which reports on November 3, investors will look for evidence that data-centre chip sales can keep growing without compromising profitability.
Nvidia’s next earnings release on November 17 will offer another read on demand from large cloud customers.
Amazon’s results on Thursday evening could also shift sentiment, particularly if its spending plans suggest that the AI infrastructure race is still accelerating.
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