Once again, the latest quarterly figures from the two US tech giants Amazon and Intel were impressive sums of money on the evening before the US stock markets closed.
But that doesn't mean anything in itself - because investors on the Nasdaq technology exchange received both reports negatively. One thing is becoming increasingly clear: the stock market is no longer prepared to uncritically accept or even applaud breathtaking amounts of investment in artificial intelligence and the necessary infrastructure.
Especially not if you have to go into debt to do this, meaning that the expenses can no longer be paid from current funds. After Amazon yesterday, Google's parent Alphabet has also felt the pain of this. Meta stocks had previously suffered severely.
Intel with a bleak outlook
It was a black day for Intel shares - after the third quarter report, the US chip manufacturer's shares lost over a fifth of their value. The reason was a weak business forecast, but also the failure of a factory in Israel. The important Kirjat Gat plant has been idle since the explosion two weeks ago, said Intel CFO David Zinsner in an interview with the Reuters news agency. This is likely to reduce group profits by around $300 million per quarter.
Traditional central processors for servers are currently in high demand. They are required for the operation of already trained AI models and for the use of so-called AI agents. The latter are programs that carry out complex tasks largely independently. Intel CEO Lip-Bu Tan was disappointed that the high demand could not be met.
Intel also predicted a worsening of sales weakness in the PC processor business. Customers held back because of skyrocketing costs for components such as memory chips. Demand is likely to fall by around 25 percent in the current quarter, Zinsner predicted. Intel expects the PC market to shrink by 10 percent in 2027, following a 12 percent decline this year.
Amazon's high investments are putting a strain on the balance sheet
Surprisingly high costs for building new AI data centers are weighing on Amazon's balance sheet. The outflow of cash has increased almost sixfold to $42.4 billion in the past three months, the online retailer announced in the evening after the US stock market closed. The share then fell around seven percent.
This development is worrying, said portfolio manager Dave Wagner from asset manager Aptus. "The operational business generates plenty of money, but the investments swallow it up completely."
Amazon is struggling with similar problems as Google parent Alphabet and Facebook operator Meta. The latter two also had to accept negative free cash flow in the third quarter due to high investments. This means that despite bubbling income, investments have to be partly financed with debt - which does not go down well on the stock market.
However, Amazon boss Andy Jassy made it clear that investments will be increased in the coming year - Amazon is particularly strongly positioned in the cloud business with its aws division - and wants to invest $220 billion in the expansion of its AI infrastructure this year. At Google it is up to 205 billion dollars and at Meta between 135 and 145 billion dollars. Microsoft cut its investment forecast on Wednesday to $170 billion from $175 billion.
“The criteria for who wins in the AI age are changing,” said Marcel Tietjen, technology expert at consulting firm BearingPoint. “The decisive factor is no longer just who has the best model or the largest data center.” The focus is shifting to the question of who can generate the largest sales and the highest profits per billion invested.
DAX is heading for weekly profits
Meanwhile, the DAX cannot escape the tech sell-off and fell around 0.7 percent in the early afternoon. On a weekly basis, however, there remains an increase of around 2.5 percent.
