Nearly $1tn wiped off big tech over AI.
Investors knocked nearly $1tn off US tech shares in a week as results from the biggest firms raised doubts that their AI spending will pay back quickly enough1. For a UK buyer, the firms selling AI are under pressure too.
Nearly $1tn wiped off big tech over AI
A sell-off in technology shares that began earlier in October wiped nearly $1tn off the Nasdaq, the US exchange heavy with tech firms, in one week1. Across the month the loss is about $2tn, as quarterly results made investors ask whether the billions going into AI can earn a return quickly enough1. The Nasdaq closed 2.8% lower on Friday and ended October with its worst monthly fall since March 20252.
Alphabet, the owner of Google, had the worst day in its history on Thursday, losing more than $500bn (£374bn) of market value2. It had told investors that the AI summaries it now shows at the top of search results were hurting its core search advertising revenue2. It expects to spend up to $205bn this year, almost all of it on AI2.
Intel's shares fell 28% on Friday, taking more than $130bn off its value2. Its quarterly profit beat analysts' forecasts, but its outlook for the last three months of the year fell well short1. Its finance chief, David Zinsner, said the company did not expect to bring in more cash than it spent this year, and that its spending on equipment would rise again2.
Amazon said it had also spent more cash than it made, and it has committed $220bn this year to AI data centres, network equipment and servers2. Reddit fell 29% after warning that Google's AI search was cutting the visitors it sends2. Between them, Meta, Alphabet, Oracle, Amazon and Microsoft have committed to spending $800bn on AI in 20262.
Kathleen Brookes, research director at the trading firm XTB, said investors had turned ruthless and now wanted payback on the AI trade2. Even after the fall, the Nasdaq is up 7.8% on a year ago2.
What it means for your AI budget
This is a story about American share prices, and we have no view on where they go next. The useful part for a British company sits underneath it. The firms selling you AI are spending sums that their own investors now question, and they need customers who pay and stay. That puts a buyer in a better position than a month ago. Before you sign a long contract, ask the supplier to show what the tool saves you, in your numbers, not theirs. None of this coverage gives a British angle, and no UK regulator has said anything about it.
The Reddit detail is worth a minute if your business is found through Google. Google itself says its AI summaries now answer questions at the top of the page, and Reddit says that is already costing it visitors. If your enquiries come from search, check whether that traffic has started to move.
Also today
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Ryanair weighs more AI to offset a soaring fuel bill
Ryanair is considering pay freezes, fewer crew on flights and more use of AI to offset a jet fuel bill it expects to rise by about €2bn (£1.6bn) next year3.
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National Grid buys land for Britain's biggest substation on Teesside
National Grid has agreed to buy 29.5 hectares at Dorman Point on Teesside for what could be Britain's biggest substation, able to power a vast neighbouring datacentre4.
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Cognizant puts more than 25,000 staff on OpenAI work
Cognizant has formed a group of more than 25,000 staff to help companies put OpenAI's ChatGPT and Codex into software development, customer service and operations5.
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Gartner says many firms will rehire staff replaced by AI
Gartner expects that by 2029 about 30% of employees laid off because of AI will be rehired at higher cost, and found only 19% of firms plan for how work is changing6.
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Every factual sentence in this briefing carries a number. These are the numbers. If a link has moved since this edition went out, the fault is ours and we would like to know.
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Tech sell-off drives US markets down by nearly $1tn after subpar earnings reports
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Ryanair considers pay freezes and reducing crew on flights as fuel costs soar
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National Grid to site biggest substation in UK near planned Teesside datacentre
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Cognizant forms 25,000-strong group to deploy AI for clients
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