Intel Plunges 29% as AI Return Fears Send Nasdaq Down 2.86%

U.S. stocks tumbled on October 30 as concerns over returns on artificial intelligence spending rattled investors. Earnings from Amazon and Intel, following Alphabet's results, failed to reassure the market and triggered a broad selloff in technology shares. A Binance hack and higher oil prices also weakened appetite for risk assets.

The Nasdaq Composite closed down 747.73 points, or 2.86%, at 25,437.00. The S&P 500 fell 140.32 points, or 1.82%, to 7,580.07, while the Dow Jones Industrial Average dropped 572.25 points, or 1.09%, to 51,770.31. The Nasdaq was down nearly 3.3% at one point during the session.

Intel shares plunged 28.58%, marking their biggest one-day drop since 1974. Third-quarter results topped market estimates, but selling intensified after the company's outlook for the next quarter fell short of expectations.

Intel forecast fourth-quarter adjusted earnings per share of $0.25, below the market estimate of $0.43. Its revenue outlook of $15 billion to $16 billion also missed the consensus forecast of $17.1 billion.

Nvidia and AMD fell 4.22% and 10.88%, respectively. American depositary receipts of SK Hynix dropped 7.95%. Weakness across major chip stocks sent the Philadelphia Semiconductor Index down 7.20%, its steepest decline since June 23.

On Wall Street, calls are growing for AI companies to show returns on their investments. Investors are looking to see whether the money poured into data centers and semiconductors will translate into sufficient profits and productivity gains. There is also concern that high interest rates could make it harder to finance additional investment.

Joe Tigay, a portfolio manager at Equity Armor Investments, said AI investment is moving beyond a phase driven by hope and ambition into one where companies must prove tangible results.

Crypto-linked stocks also fell sharply in the wake of the Binance hack. Coinbase slid 10.62% and Robinhood dropped 7.21%. Bitcoin also fell below $77,000 during the session. The exchange security breach weighed on both digital-asset prices and shares of related companies.

By contrast, Exxon Mobil and Chevron rose 2.16% and 1.75%, respectively, after posting results that beat market expectations. Higher oil prices and refining margins, driven by energy supply disruptions tied to the wars in the Middle East and Ukraine, supported the gains.

International oil prices also rose more than 2% amid concern that the war involving Iran could widen. Brent crude for December delivery settled up 2.40% at $117.64 a barrel, its highest since April 29. U.S. West Texas Intermediate crude futures rose 2.08% to close at $104.12.