For a year the market cheered every dollar Big Tech promised to spend on artificial intelligence. This week it started asking for the receipts, and last night Amazon handed over a bill nobody wanted to read. Its cloud business grew at the fastest pace in nearly five years, yet sales and profits came in a touch light, spending ran hot and the shares fell more than 10 per cent after hours. Intel followed with a gloomy outlook and dropped even harder. Coming a day after Alphabet’s worst session on record, it leaves Nasdaq futures down almost 2 per cent and Friday looking like a long one for anyone holding technology.
The 60-Second Market View
Wall Street slipped on Thursday as Alphabet’s slide dragged on the big names. The S&P 500 fell 0.30 per cent to 7,720.39, the Nasdaq Composite lost 1.38 per cent to 26,184.72 and the Dow eased 0.25 per cent to 52,342.56. Smaller companies told a different story, with the Russell 2000 up about 1 per cent, a sign that money is rotating rather than fleeing. In London the FTSE 100 added 0.26 per cent to 10,722.07.
After the bell the mood soured. Nasdaq 100 futures are down about 1.8 per cent and S&P 500 futures nearly 0.9 per cent, while Dow futures are only slightly lower. Brent crude has climbed back above $116, gold has slipped under $4,000, the dollar index has softened to about 101.8 and the US 10-year yield has eased to around 4.93 per cent. Bitcoin is down about 3 per cent near $78,250.
What Happened Overnight?
Asia took its cue from the technology sell-off. South Korea’s KOSPI fell about 3.1 per cent and Taiwan dropped 2.2 per cent, both markets heavy with the chip makers that supply the AI build-out. Japan’s Nikkei lost 2.2 per cent from its record high. Hong Kong was the exception, up about 1.6 per cent, while Shanghai slipped 0.3 per cent and Australia edged higher.
The Bank of Japan left its key rate at 1.25 per cent on an 8 to 1 vote, but the message leaned towards more tightening. It raised its inflation forecasts, said underlying inflation is now around its 2 per cent goal, and set out plans to speed up sales of its stock fund holdings from January 2027. Many in the market now see a December rise as a live possibility, which helped the yen firm slightly to around 157.5 to the dollar.
Thursday’s data gave the Fed little reason to soften. US growth came in at 3.4 per cent annualised for the third quarter, ahead of the 3.2 per cent forecast, driven by consumer spending and a surge in business investment tied to AI. Core PCE inflation, the Fed’s preferred gauge, rose 0.3 per cent on the month, in line with expectations. Across the Atlantic the European Central Bank held its deposit rate at 2.50 per cent, and Christine Lagarde announced she will step down as president on 7 February 2027, months ahead of schedule.
The Big Story: Amazon Shows Growth Is No Longer Enough
Amazon reported third-quarter revenue of about $201.9 billion, a fraction below forecasts of around $202.2 billion, and earnings of $1.89 a share against expectations near $1.96. Amazon Web Services, its cloud arm, grew 39 per cent to roughly $46 billion, its quickest growth in almost five years, and chief executive Andy Jassy talked up even faster expansion ahead. The market looked straight past that to capital spending of around $77 billion in the quarter and softer numbers elsewhere, including advertising. The shares fell more than 10 per cent in late trading.
Intel’s results were better than expected, but its guidance for the final quarter, revenue of $15 billion to $16 billion against forecasts above $17 billion, pointed to a weak PC market well into next year. The shares fell by between 16 and 20 per cent after hours, according to reports.
Put these alongside Alphabet, which fell about 13 per cent on Thursday after negative free cash flow and huge spending plans, and a pattern is forming. Investors still believe in AI demand. What they no longer accept is spending that races ahead of the cash it brings in, especially when the US 10-year yield is near 5 per cent and borrowing to build data centres costs far more than it did. Microsoft, which showed its spending turning into revenue, was rewarded on Wednesday. Everyone else is being marked on a harsher curve.
The second-order effect matters for portfolios that do not hold a single tech share. The largest US companies make up a big slice of global indices and pension funds. Several of the so-called Magnificent Seven are now more than 20 per cent off their peaks even as the S&P 500 sits close to its record, which tells you how narrow the market’s support has become. Thursday’s rise in smaller companies suggests money is moving into other corners rather than leaving, and that is the healthier version of this story.
What to watch now is the US open. If Amazon and Intel drag chip makers and cloud suppliers lower again, the AI trade has a broader problem. If buyers step in and the rotation into smaller and old-economy stocks continues, this looks more like a painful reset of expectations than the start of something worse.
FX
The dollar is a little weaker this morning, with the dollar index near 101.8 as US yields ease. EUR/USD is around 1.119 and sterling is near $1.339, holding up well after the Budget. USD/JPY is close to 157.5 after the Bank of Japan’s hawkish hold, and Governor Ueda’s press conference this morning could move the yen if he hints more firmly at December. EUR/GBP is steady near 0.836. Eurozone growth figures at 10:00 and German inflation at 13:00 are the euro’s tests today.
Equities
London may again be one of the calmer places to be. The FTSE 100 carries little US technology and plenty of energy, banks and healthcare, and three heavyweights report before the open: BP, AstraZeneca and NatWest. After Shell’s bumper refining profits on Thursday, BP’s numbers will show whether high fuel margins are lifting the whole sector. NatWest will be read alongside the higher bank levy announced in the Budget. In Europe, Sanofi, Crédit Agricole and Puma are among those reporting. In the US, Exxon Mobil and Chevron report before the bell, while Eli Lilly’s jump to record highs on Thursday is a reminder that not every big name is struggling.
Bonds
US Treasury yields have eased, with the 10-year around 4.93 per cent and the two-year near 4.58 per cent, as the tech sell-off nudges some money into safety. The 10-year gilt yield is about 5.29 per cent, a little lower after the Budget passed calmly. German 10-year yields are near 3.33 per cent and Japan’s around 2.79 per cent. Lower yields would normally help technology shares, so the fact that the Nasdaq is falling anyway shows this sell-off is about earnings, not interest rates.
Commodities
Brent crude has risen about 1.2 per cent to around $116 a barrel and US crude is near $103, with the Gulf still unsettled and supplies through the Strait of Hormuz disrupted. That keeps fuel prices high and gives oil majors a strong backdrop for results today. Gold has slipped back below $4,000 an ounce and silver is down almost 2 per cent near $51.40, extending a slide that has taken it well below its long-term average. Copper is slightly lower near $6.55 a pound.
Crypto
Bitcoin is down about 3 per cent at around $78,250 and Ether has fallen about 4 per cent to near $2,240, moving in step with technology shares. Crypto is trading like a high-risk tech stock this week rather than a hedge, and the $80,000 level that held earlier in the week is now overhead.
Today’s Economic Calendar
Early morning, UK time — Bank of Japan Governor Ueda’s press conference — Any firmer hint at a December rise would strengthen the yen.
From 06:30 — French third-quarter GDP and October inflation, then German GDP — The first read on whether Europe’s economy is holding up under high energy prices.
07:00 — BP, AstraZeneca and NatWest results — Three FTSE 100 heavyweights covering energy, healthcare and banks.
10:00 — Eurozone third-quarter GDP and unemployment — A soft number would add to the case for the ECB staying on hold.
Late morning — Chevron and Exxon Mobil results — Two oil majors reporting with Brent above $115.
12:30 — US employment cost index and Canadian GDP — Wage costs feed straight into the Fed’s inflation worries.
13:00 — German October inflation — The previous reading was 3.3 per cent. A hotter figure would keep pressure on the ECB.
13:45 — Chicago PMI — A timely read on US manufacturing.
Afternoon — Speeches from Fed officials Mary Daly and Alberto Musalem and the ECB’s Philip Lane — Clues on how central bankers see the strong US data.
Levels Traders Are Watching
These are reference points, not predictions. On the S&P 500, Thursday’s close near 7,720 and the 7,700 round number are the first areas to watch, with futures already trading below them. For Nasdaq 100 futures, the 29,000 area is where the overnight selling has paused. Brent’s $115 is the pivot after its rebound, and gold’s $4,000 is the line in the sand. On GBP/USD, $1.34 is the next round level overhead, and on the US 10-year yield, 5 per cent remains the number that matters most for valuations. For Bitcoin, $80,000 is now resistance rather than support.
Where This Leaves Traders
The fair read this morning is that the AI boom has moved into a harder phase. Demand looks real, as Amazon’s cloud growth shows, but the market has stopped paying for spending that does not yet pay for itself. With US growth strong, inflation sticky and a Fed in no hurry to cut, investors have far less patience for long payback periods. The bias for technology is cautious, while the rotation into smaller companies, energy and defensive sectors is worth respecting.
What would change the view is fairly clear. A strong rebound in chip makers after the US open would suggest Amazon and Intel are company problems rather than a sector warning. Hot German inflation or US wage costs would push yields back up and add pressure on growth stocks. A sudden move in oil on Gulf headlines would hit everything at once. The markets worth keeping on screen are Nasdaq 100 futures into the US open, the FTSE 100 through BP and NatWest, Brent crude, USD/JPY around Ueda’s comments and Bitcoin near $80,000.
For beginners, this week is a lesson in expectations. Amazon grew its cloud business at the fastest pace in years and still lost more than a tenth of its value after hours, because prices move on what was hoped for, not just on what happened. Knowing how you would act when good news meets a falling price is a skill worth testing before it costs you money. The free Samuel & Co Trading Trader Assessment is a sensible place to see how you would handle a day like this one.
