Tech Stocks Slide as AI Investment Costs Mount

Intel provided a stark look at the cost of the AI arms race. The chip maker exceeded analyst expectations with second-quarter sales of $16.1 billion, a 25% jump from the previous year. Yet, the positive growth figures were overshadowed by a sharp pivot in financial strategy: Intel raised its annual capital expenditure forecast to over $20 billion, up from $18 billion, and signaled that spending will climb even higher in 2025.

In contrast, SAP offered a rare bright spot for the sector. The German software giant saw its shares climb after reporting a 26% growth in its cloud backlog, signaling robust demand that defied broader industry anxiety. With total revenue hitting 9.88 billion euros, the company managed to calm fears that AI disruption might erode its core business model. Meanwhile, regulatory pressures are mounting elsewhere, as the European Union provisionally found TikTok in breach of digital safety rules regarding the protection of minors.