Sellers hit Nasdaq hardest as AI expense concerns mount

US equities moved lower, and the biggest declines were in the Nasdaq indexes, as investors took another look at earnings expectations and the price of fulfilling the AI growth narrative.

• The Dow stood at 52,172.21, down 176.04 points, or 0.34%.

• The S&P 500 lost 88.50 points, or 1.15%, to 7,631.89.

• Nasdaq Composite fell 569.26 points, or 2.17%, to 25,615.47.

• Russell 2000 was off 18.92 points, or 0.66%, at 2,840.30.

• Nasdaq 100 dropped 752.25 points, or 2.56%, to 28,650.25.

The weakness points to a change in what investors are prepared to reward. AI growth remains important, yet the market now demands more clarity on what that growth costs, when the spending will pay off, and how much cash remains along the way.

Both Amazon and Intel reported after yesterday's close, and each left investors disappointed. The issues differ, yet the two reports present buyers with the same dilemma: does the outlook support the current stock price?

Amazon: Expansion is strong, but the spending tab is large

Amazon's focus is on capital outlays and cash generation. AWS keeps expanding at a solid pace, yet the infrastructure needed to meet that demand calls for massive investment. Such spending eats into the cash the operation produces, and a weaker holiday sales forecast raises questions about consumer demand.

What investors are looking for is a clearer route from AI demand to durable cash generation. Growth counts, but the expense of achieving it matters as well.

On the technical side, the stock has been pushed beneath two notable marks: the 200-day moving average at $243.38 and the 50% midpoint of the advance off the February low at $241.60. Shares are changing hands around $233.22.

These losses damage the chart and make the $241.60–$243.38 zone a ceiling for any rebound. To start repairing the chart, buyers have to recapture that zone. Until that happens, any bounce will keep the stock under those key levels, and sellers stay in control.

Intel: A better-than-expected report does not ease recovery worries

Intel's issue is whether its recovery can last. The company delivered better-than-expected earnings, but weak guidance for the period ahead turned the spotlight onto what lies ahead. Soft PC demand, production constraints and heavy ongoing spending pose obstacles over the coming quarters.

Beating earnings can draw interest. But it is the outlook that decides whether investors stay put.

Intel stock has been hit hard, down roughly 28.6% to $66, the weakest price since April. Even with that drop, the shares are far above their year-end level near $37.50. Still, much of a rally that reached $142.35 this year has been given back.

It is a clear signal that a lofty stock can quickly turn fragile when growth expectations are revised lower.

The AI trade now faces a harder test

Taken as a pair, the results call into question a key premise supporting the tech rally: that solid AI demand alone can keep share prices moving up.

AI demand can stay healthy even as the investment required to serve it presses on cash flow and margins. With expectations high, investors are less tolerant of doubt over when returns will arrive and how big they will be.

Technical damage is adding weight to the fundamental worries. Both the Nasdaq Composite and the Nasdaq 100 moved under their 100-day moving averages during the prior session. The downside gaps today have pierced further support, strengthening the sellers' hand and leaving buyers with more to repair.

Nasdaq Composite: One more support break points downward

The Nasdaq Composite slipped under its 100-day moving average, close to 26,252, in the previous session and settled at 26,184.72.

The index has opened with a gap that takes it under the next technical marker at 25,831.74. It was changing hands at 25,615.47, a decline of 2.17%, in early trading.

Once that support gave way, attention turns to the 25,035 zone, where the upward-sloping 200-day moving average and the 38.2% retracement sit close together. That cluster makes the area a key gauge should the weakness persist. Buyers could try to defend it, with the outcome depending on whether the level holds or fails.

What would change the setup before that?

Buyers would first need to climb back above 25,831.74 and hold it. That would start to put today's downside move in doubt. From there, regaining the 100-day moving average near 26,252 would be required to wrest back more control.

Until those areas are reclaimed, the technical edge stays with sellers.

Nasdaq 100: A previous floor now serves as resistance

The Nasdaq 100, too, fell under its 100-day moving average around 29,559.71 in the prior session, ending down 1.38% at 29,402.51.

Today's opening gap has pulled the index beneath a significant swing zone spanning 28,822 to 28,953. It was quoted at 28,650.25, 2.56% lower, in early action.

This breakdown is significant because a region that once drew in buyers now becomes a hurdle for any rebound. Should the index move back toward that former floor and hit selling pressure, the negative bias would stay in force.

Below, the first important objective is the 38.2% retracement of the advance from April's low at 28,108, with the rising 200-day moving average at 27,894.40 next.

For the bulls, the immediate job is to win back the 28,822–28,953 swing zone and build a support base above it. Doing so would give the near-term chart some stability. To make a more convincing argument that buyers are back in charge, the index would also need to climb above the 100-day moving average near 29,559.71.

Right now, earnings worries have handed investors a motive to sell, while technical breakdowns have given bears extra conviction. To take back the upper hand, buyers have to recover the broken levels.