These are massive and sudden movements, even in huge stocks.
By Wolf Richter for WOLF STREET.
People have become so nervous that they are jumping off the bandwagon in large enough numbers to get out before everyone else, causing even the largest stocks to fall massively when there are wrinkles in sight. A lot happened today.
Intel plunged 23% after hours today and 3.6% during the day, for a combined plunge of 25.8%, to $70.87. Since its June 22 high, the stock has now plunged 50%. Other chip stocks fell in sympathy.
It reported higher earnings, but included terrible forecasts for its PC business, along with other disappointing details about its business, as well as lower-than-expected profit and revenue forecasts.
The question for me is not why it fell to $70.87; the question is why on earth it jumped to $142 in June from $20 a year earlier. What were people thinking? Of course, Trump hyped it up, and the government bought a stake at much lower prices, and then there was the general semiconductor craze and everything went WHOOSH.
But it seems everyone knew the tip wouldn’t last, they just rode it while the ride was good, while watching out for a few wrinkles, and those wrinkles became sell signals. And at today’s sell signal, they destroyed more than a quarter of Intel’s value in one fell swoop. It’s brutal.
Amazon shares plunged 11% today, including 4.2% during regular trading and another 7.3% in after-hours trading, to $225.99, bringing the decline from the Aug. 3 high to 21%.
Its earnings disappointed slightly on the top and bottom, and advertising revenue also disappointed, and capital spending and negative free cash flow took a beating. But AWS revenue soared 39% and AWS operating revenue soared 55%, beating. It’s not like the company is collapsing.
CEO Andy Jassy said on the conference call that the company plans to “spend a lot more in 2027” and, to make that happen more smoothly, he added that Amazon has “a clear vision of attractive financial returns.”
But the AI spending spree and precariously high stock prices have started to put people on edge, and they don’t want to get stuck; they want to jump first.
Alphabet plunged 12.3% in regular trading and another 1.1% in after-hours trading to $279.18, for a combined decline of 13.3%, knocking more than $500 billion off the company’s value.
Since the peak on May 13, the stock has plunged 31%. But the billions no longer matter, there are so many of them.
He published his results Wednesday evening. Revenues jumped 25% in the third quarter, about as expected, earnings per share missed by a wide margin, but that was due to securities holdings, not operations. Capital spending reached $51 billion in the third quarter, causing its free cash flow to deteriorate to a negative $9.1 billion. And then there was the search ad revenue line item, which only grew 12%, beating expectations, and it looks like even Google’s own search ad revenue is being gobbled up by AI.
People had been riding this for as long as possible, knowing that they would have to jump at the first sign of bad breath before anyone else who wanted to jump. Everyone is very nervous these days about these precariously high stock prices.
ServiceNowwhich describes itself as “an AI-driven, workflow-driven platform that unifies sales, order management, customer service and field service on a single system,” plunged 27% during the day, to $109.67, and is now down 52% from its December 2024 high. But the stock was even lower earlier this year and is now up from those levels. There are a lot of trigger-happy people out there.
The problem today is that it declared its profits. Revenue jumped 20%, roughly in line with estimates, while adjusted profit was a bit behind. It slightly raised its outlook for the whole of 2026, but not enough.
Fortineta cybersecurity and networking provider, plunged 20% during the day to $139.10, and 29% from its peak in early October. He also released his results today, and people pulled the trigger.
Reddit plunged a total of 21.3% today, including 18.2% after hours and 3.7% during the day, to $106.00. People are trigger-happy, aren’t they?
Since its all-time high on January 13, it has plunged 60%.
This evening, it announced its third quarter results, which were better than expectations. But there were weak forecasts for the fourth quarter and the announcement of plans to require all users to create an official account to access the platform.
And then CEO Steve Huffman told CNBC that Reddit’s already declining search traffic from Google had “decreased significantly in this quarter” due to the “shift to AI mode and AI insights.” This is something that happens to many websites, including WOLF STREET. So welcome to the club where AI steals everything and monopolizes everything.
And then there was Anthropic. These sudden, sharp market reactions to wrinkles in earnings reports occurred against the backdrop of Anthropic’s proposed S-1 IPO filing, which triggered a bullshit overload that blew a fuse and plunged the entire neighborhood into darkness.
Anyway, we can see that people are very nervous now. Everyone is aware that it can become difficult at any time. People always want to get to the top, not to miss that 20% or 100% gain, but to be the first to jump.
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