Tech stocks faced significant pressure in premarket trading on Friday, October 30, 2026, as Amazon and Intel reported disappointing earnings. Amazon shares dropped 7%, while Intel plummeted 25%, following weaker-than-expected results. Amazon missed revenue and earnings estimates for the third quarter and reported negative free cash flow for the second straight quarter, though it maintained its $220 billion capital expenditure forecast for the year.
Intel's decline came after it issued weaker-than-expected guidance, citing ongoing softness in the PC market. The news sent shockwaves through the semiconductor sector, with chip stocks like Micron, Nvidia, and Arm also declining in premarket trade. European semiconductor companies, including ASML, saw sharp drops as well.
The tech sector's struggles capped off a tough week for earnings, with Nasdaq futures down 2%. Alphabet shares had closed 13% lower on Thursday, marking their worst single-day drop in history due to ballooning negative free cash flow. Microsoft, however, saw its shares rise after remaining cash flow positive in the September quarter.
Investors are growing nervous about the massive AI spending from tech giants and whether it will pay off. Matt Orton, chief market strategist at Raymond James, told CNBC's 'Squawk Box Europe' that while the current situation is painful, the fundamentals remain strong, especially for AI-related investments. He noted that these companies turning free cash flow negative is likely temporary.