Intel (INTC +1.72%) stock fell 8.1% on Thursday, Oct. 22, as rising oil prices and concerns about AI spending drag on chip stocks. Brent crude topped $112 a barrel following attacks in Saudi Arabia.
The S&P 500 and the Nasdaq Composite dropped 1.2% and 2.6%, respectively.
INTC Intel
NASDAQ · As of 4:00 PM ET 10/23/26
Expensive oil complicates the outlook for chips
The renewed threat to Middle East energy supplies is once again weighing on the AI trade, fueling concerns that inflation and borrowing costs will remain higher for longer.
While U.S. Treasury yields actually fell Thursday (largely due to the political unrest in Europe), they are well above where they were before the war began. The problem for the AI industry is clear: the massive data center build-out requires enormous amounts of money, and financing it is getting more and more expensive.
Image source: Getty Images.
As a proverbial seller of shovels in the AI gold rush, Intel needs customers to keep buying its shovels.
Meta's cash burn fuels AI funding concerns
Meta Platforms didn't help calm the market's nerves with its Q3 earnings report. While it said it would likely spend even more than it had planned on capex by the end of its fiscal year, the company reported negative free cash flow (FCF) -- the money left after operating expenses and capital spending -- for the first time since 2012.
It also approved a non-voting stock class it can use to raise capital without diluting CEO Mark Zuckerberg's voting control. This was taken as a signal that financing costs are making additional borrowing unattractive and the company might turn to equity sales.
