Tech stocks dip as AI spending concerns weigh on markets

Global equity markets were mixed on Friday, as technology stocks faced pressure from renewed concerns over the profitability of artificial-intelligence investments. Wall Street futures pointed lower, with the Nasdaq falling more than 2 percent after Amazon signalled that its AI-related capital expenditures would continue to rise and Intel warned of cash-burning this year. TSX futures were also in the red following a largely unchanged close on the Canadian main market the day before.

In Canada, investors saw results from Canadian National Railway, Cameco, Imperial Oil and Magna International, while Wall Street focused on earnings from ExxonMobil, AbbVie, Chevron and Colgate-Palmolive. Amazon shares were down almost 7 percent in pre-market trading after the company reported a significant cash outflow in the third quarter and indicated further capital spending next year.

"This is a good example of how the AI trade has changed," said Jake Behan, head of capital markets at Direxion. "At this point, the market isn’t just asking how fast you can grow. It’s asking what you have to spend to get there."

In Europe, the STOXX 600 slipped 0.25 percent, the FTSE 100 rose 0.1 percent, the DAX fell 0.7 percent and the CAC 40 was unchanged. In Asia, Japan’s Nikkei dropped 2.12 percent while Hong Kong’s Hang Seng gained 1.46 percent.

Oil prices rose after a tanker was attacked in the Strait of Hormuz, highlighting ongoing supply risks linked to the conflict in the region. Brent crude for December advanced 2.5 percent to US$117.80 a barrel and WTI rose 2.25 percent to US$104.30.

"Continued kinetic action around the Strait of Hormuz amidst doubts of a viable diplomatic pathway are keeping oil prices elevated in expectation of an escalation of the conflict in coming weeks," said Saul Kavonic, head of energy research at MST Marquee.

Spot gold fell 1 percent to US$3,980.40 an ounce, and U.S. gold futures for December dropped the same amount to US$3,991.10.

The Canadian dollar strengthened, trading at US$1.3960 and moving about 2.09 percent higher against the U.S. dollar over the past month. The U.S. dollar index slipped 0.36 percent to 101.67, while the euro and the British pound rose modestly.

U.S. 10-year Treasury yields fell to 4.923 percent. Canadian Imperial Bank of Commerce announced the appointment of former federal finance minister Bill Morneau as the next chair of its board of directors. Upcoming economic data include Canada’s September real GDP, U.S. employment cost index for Q3, and U.S. Chicago PMI for October.