Global Tech Rout Deepens as AI Earnings Misses and Binance Hack Trigger Market Panic

Key points

• Amazon and Intel reported weak results, with Amazon's stock falling over 7% in after-hours trading and Intel dropping 23% due to poor PC processor demand and supply chain issues.
• Alphabet shares plunged more than 12% after reporting weaker revenue growth from advertising and search, despite announcing increased capital expenditure for AI infrastructure.
• Asian markets experienced significant losses, with South Korean chipmaker SK hynix dropping over 7%, Samsung losing 3%, and Japanese firms Kioxia and Advantest shedding nearly 6%.
• The Nasdaq finished down more than 1%, reflecting broader concerns about AI bubble risks and rising funding costs that could force hyperscalers to slow their build-out.
• Oil prices climbed more than 1%, with Brent heading toward $120 per barrel, driven by fears of escalating US-Iran hostilities following a report on military options for Tehran.
• Bitcoin tumbled around 5% to a one-month low of approximately $76,400 after Binance disclosed a major hack impacting over $6 billion in funds, the largest such cyberattack in history.

Background

This sell-off follows a week of volatility where Alphabet previously erased $500 billion in market value due to AI spending fears and negative free cash flow. Earlier reports indicated that Asian markets, heavily reliant on AI hardware, faced significant risks from potential US spending slowdowns and rate hike fears. The current downturn extends previous concerns about AI investments cannibalizing traditional profits without yielding immediate returns.

Why it matters

The sharp declines in major tech firms signal growing investor anxiety about the sustainability of massive AI capital expenditures and the potential for a broader economic slowdown. The simultaneous rise in oil prices and crypto market instability highlights interconnected risks from geopolitical tensions and cybersecurity breaches, which could further destabilize global financial markets in the coming weeks.

What to watch

Investors are now focusing on Tuesday's US midterm elections and their potential impact on Donald Trump's presidency, particularly regarding foreign policy decisions that could affect oil prices. Market attention will also turn to how the Binance hack and subsequent asset freezes impact crypto confidence, as well as whether further earnings reports from other tech giants will confirm or alleviate current fears about AI profitability.