Intel -23%, Google -13%: Start of AI Crash or Rebound Near?

Google has just suffered one of the biggest blows in its history. Alphabet lost about 13% in Thursday’s regular session, while Intel tumbled roughly 23% after hours following its earnings release. Amazon also slid after the closing bell. It looks like the AI boom is coming apart. But one thing does not fit the crash narrative: most S&P 500 stocks actually rose on Thursday.

So is this the start of a wider sell-off, or is technology being hit hardest while money quietly moves into the rest of the market? The chart technicals are adding to the tension.

Google and Amazon are near previous lows; Nvidia, AMD and other chip names are approaching trendline or gap support. An oversold market can bounce there, but only if buyers step in.

The sell-off is reaching a crossroads

After Intel, Google, and Amazon’s stinker, the sell-off is not limited to just a few tech stocks. AMD is scheduled to gap down by 6.26%, while Nvidia is holding stronger at -2.12%. Nebius is gapping down by -5.99%, while Micron is holding at a -3.75% gap down.

You get the idea.

The key question is this – are we entering a phase where reaccumulation is now a worthwhile play? And will the rest of the markets think so?

From a technical perspective, many of these stocks are revisiting a rising trendline support or a significant previous low.

But they are potential support areas, not an instruction to buy. Losing them would make another leg down more likely.

The Sharks like the sales. They want to see the cash.

Imagine pitching a business on Shark Tank: sales are booming, customers cannot get enough, and you want to double production.

The Sharks are intrigued; they lean in.

Then here comes the pitch: an ask of billions of dollars – beyond your current revenue – to spend before that growth pays for itself. The question changes from “How fast can you grow?” to “When do I get my money back?”

That is the problem facing the AI trade, and we’ve heard this problem before; it’s the AI capex story all over again.

Alphabet’s quarterly results showed revenue up 25% and Google Cloud sales doubling, up 103% to $30.7 billion. Yet capital expenditure reached $51.4 billion in the quarter, leaving free cash flow negative $9.1 billion.

Its longer-term cash generation is still positive. Investors are not being shown collapsing demand; they are being asked to fund an increasingly expensive expansion.

Amazon reported AWS growth of 39.3% and $28.1 billion in quarterly operating profit. Nevertheless, trailing 12-month free cash flow swung from positive $14.8 billion to negative $42.4 billion, largely because of AI infrastructure spending. That contrast is why the market is questioning the returns on AI investment, not necessarily the existence of demand.

Intel is a different story. Its revenue rose 21%, but management expects its weak PC market to persist into 2027 and guided to just $0.25 in adjusted fourth-quarter earnings per share.

The takeaway is this: AI has not stopped growing, investors are simply spooked and repricing their expectations.

S&P 500 Breadth is recovering.

While the Nasdaq lost about 1.4% on Thursday, the Russell 2000 gained roughly 1%, and about four in five S&P 500 constituents advanced. Small caps and less AI-dependent sectors were attracting buyers.

This looks more like a rotation away from a crowded technology trade than indiscriminate selling so far.

S&P 500 can fall because a handful of enormous companies carry disproportionate weight, even when its average constituent is doing better. And with roughly two-thirds of members still above their 50-day and 200-day moving averages, the broader index has not yet experienced a widespread technical breakdown.

The risk is that continued AI selling eventually spreads to those healthier stocks.

Could the lows be close?

There is at least a reasonable bounce setup. On the Google chart, the $275–281 region is an immediate test; failure there leaves the deeper weekly target near $242 in play.

The MAGS ETF is testing a rising trendline while Stochastic RSI is oversold and potentially forming a double bottom. That is a reason to watch for a turn, but ultimately, we’ll still need more proof this turn is likely.

What I would personally watch is a gap down that turns into a buying candle that pushes MAGS back above its rising trendline. And that could be a sign that MAGS’ more AI-heavy constituents (Google, Amazon, Nvidia, META) are making a recovery.

The alternative scenario is that it is the “physical tech” companies like Apple and Tesla, pictured below, carrying the party.

Then there are the 3 November US midterms. Equities have often recovered in the months after midterm elections as political uncertainty fades, although the late-2018 sell-off is a reminder that election day does not guarantee an immediate bottom. That is quite relevant to our current scenario as the PCE inflation rate remains hot at 3.6%, keeping interest-rate risk alive.

What would make the rebound believable?

First, Google needs to defend or recover $275–281, while MAGS and major chip stocks stop making fresh lows. Second, the strong breadth readings need to survive Friday’s full reaction to Intel and Amazon. Third, investors need evidence that AI revenue can eventually catch up with the spending required to generate it.

If those conditions improve, the midterms could help turn the sell-off into a relief rally. If support breaks and the selling spreads from technology into the rest of the market, this stops looking like rotation and starts looking more like a genuine market-wide correction. The AI boom may still be growing; the price investors are willing to pay for it is what has changed.