Friday close: Intel, Amazon, and the AI spending question

Study version of the October 30 evening note. There is no audio. This is not investment advice.

In one line, U.S. stocks fell hard on Friday, October 30, because technology companies spending heavily on AI disappointed. Intel fell almost ▼ 29% in a day. Alphabet's miss from the day before was still in the market. Some companies far from that spending, such as Eli Lilly and Mastercard, rose.

An index is a score made by putting many stock prices into one basket. Friday's close was S&P 500 down ▼ 1.8% to 7,580.07, Nasdaq down ▼ 2.9% to 25,437.00, Dow down ▼ 1.1% to 51,770.31, and Russell 2000 down ▼ 1.7% to 2,811.84. The S&P 500 drop was the biggest day since June.

For the week, the S&P 500 fell ▼ 0.6%, the Dow 0.9%, and the Nasdaq 2%. The small-company basket rose 1.3%. For the year, a report said the S&P 500 was still up 10.7%, the Dow 7.7%, the Nasdaq 9.4%, and the Russell 2000 13.3%. October alone saw the Nasdaq down 5.3%, the biggest month since March 2025. The S&P 500 fell 0.9% in the month, and the Dow rose 1.7%.

AI is software that makes text, pictures, and answers. Growing it needs servers, chips, power, and data centers. Capital spending is money spent on long-lived things such as those servers. A report said worry that the AI boom had pushed prices too high made the technology selloff worse.

Intel was the day's clearest example. A report said the stock fell ▼ 29% on Friday and closed just under $66. It was also the worst day since 1974 and the worst stock in the S&P 500 that day. The odd part is that the third-quarter report itself beat forecasts. Investors looked at the next quarter. Intel guided fourth-quarter revenue to $15 billion to $16 billion, below a collection of analyst forecasts. Accounting earnings-per-share guidance was only 10 cents. CEO Lip-Bu Tan said AI demand was extremely high and hard to meet. Foundry revenue, chips made for other companies, rose almost ▲ 60% from a year earlier, but the operating loss was almost $1.9 billion. Through Thursday's close the stock had been up about 250% for the year. Morgan Stanley cut its target from $84 to $75.

AMD and Marvell fell by double-digit percentages, and Broadcom and Micron each fell more than 5%. Nvidia fell 4.2%. The semiconductor ETF SOXX, a fund that holds many chip stocks, fell more than 8%.

Amazon's report from after the prior close weighed on Friday. It missed Wall Street, and free cash flow, cash left after running the business and buying equipment, had shrunk in a worrying way while AI spending was large. The stock was down as much as 6% during the day and closed down 1.4%.

Alphabet, Google's parent, was the prior day's story. DK's October 30 stock note said it fell ▼ 12.68% to $283.70. Third-quarter revenue of $127.6 billion and adjusted earnings per share of $2.67 both missed, the first double miss in about four years. Cloud revenue rose ▲ 103%, but search missed. Free cash flow was a $9.1 billion deficit. A deficit means cash was short. Capital spending of $51.36 billion was below a $55.09 billion forecast, and the stock still fell because next year would cost more. Thursday's 1.6% Nasdaq drop was tied to that report. Friday's Intel and Amazon were the next scene of the same question: does AI spending come back as profit?

Microsoft fell ▼ 0.14% to $530.28 in DK's note. Revenue of $92.3 billion, up 19%, beat, and Azure grew 48%, faster than the prior quarter's 42%. It still planned its first U.S. corporate bond since 2017, at least $25 billion. A one-line DK note said demand was 4.6 times the issue. Quarterly capital spending of $45.2 billion was below a $50.7 billion forecast because outside suppliers delivered capacity late. CoreWeave fell ▼ 4.99% to $60.74.

ServiceNow beat on revenue, but adjusted earnings per share of $1.00 missed $1.02, and next-quarter backlog growth guidance of 18.5% missed 19.8%. The stock fell 26.97% to $109.64, which DK called the worst day since listing. Fortinet beat the quarter, then cut yearly service-revenue guidance from $5.15 billion to $5.17 billion and fell 20.24% to $138.85. Product revenue growth slowed to 37% from 52%.

Eli Lilly rose ▲ 6.56% to $1,372.85. Third-quarter revenue of $24.4 billion, up 39%, beat, and the yearly revenue outlook rose from $91 billion to $92 billion, a third raise. Mounjaro rose 65% and Zepbound 49%. Merck rose 3.84% to $146.34 on revenue of $18.1 billion and adjusted earnings per share of $2.49. Of $830 million in new injectable Keytruda sales, about $550 million was customers buying ahead. Mastercard rose 4.18% to $635.80, a 52-week high. Revenue of $9.8 billion rose 14%. Cross-border volume rose 11% and value-added services 19%.

Caterpillar fell ▼ 9.29% to $647.08 even with a record backlog of $78.1 billion. This year's tariff cost was about $2.2 billion, operating margin was at the low end of the target range, and the yearly revenue outlook was only maintained. A tariff is a tax on goods crossing a border. A good company and a good price today are not the same thing.

September PCE, a price gauge of what people bought, rose ▲ 3.6% from a year earlier, versus 3.4% the prior month, and 0.5% in the month. Core PCE, without food and energy, rose 3.1% from a year earlier and 0.3% in the month. The Fed, the U.S. central bank, is comfortable near 2% a year, so 3.6% was still hot. Third-quarter GDP, the value produced in the country, grew at a 3.4% annual rate, above the 3.2% forecast and the prior 2.2%. Growth and hot prices together make fast rate cuts harder. A rate is the price of borrowing. DK's October 29 one-line note said the Fed held the policy rate at 3.75% to 4.00%. This mail did not reopen the Fed's own text to recheck that range.

A report said Treasury yields fell even as oil rose. A Treasury is U.S. government debt. A lower yield often means more buyers pushed the price up. The 10-year was near 4.93%. Gold futures fell 3.7% to $3,883 an ounce, the lowest since September of the prior year. WTI futures rose 2.4% and topped $104 a barrel. DK's one-line note mentioned tanker strikes near Hormuz.

Bitcoin fell from near $82,000 the day before to below $77,000. Reports mentioned a large Binance hack. DK's one-line note said the Binance loss was debated in the billions, and a report said at least $2.6 million of user funds left Polymarket. Strategy fell almost ▼ 8%, Coinbase more than 10%, and Robinhood 7.2%.

Three lines to keep. Friday's drop was about whether AI spending becomes profit, not about one company alone. A sales beat is not enough if the next quarter looks slower. Inflation was still hot while the economy was still growing.

The Fed range is DK's wording, not a recheck of the Fed text.