US chip maker Intel recently announced plans to cut more than 15,000 jobs in an effort to revive the business and compete with rivals. This move caused shares in the company to plummet by up to 20%, with falling sales further impacting the stock. The news from Intel also had a ripple effect on other tech giants, contributing to a sharp decline in Asian stock markets, particularly in Japan where the Nikkei share index closed down 5.8%, marking the largest percentage fall since March 2020. Japanese tech firms were among the biggest losers, reflecting concerns about the strength of the US economy.
A downbeat survey of US manufacturing firms triggered fears of economic weakness, adding to the apprehension surrounding the latest US jobs figures. The three major share indexes in the US closed lower on Thursday, with shares in big names such as Amazon continuing to fall in after-hours trade. Amazon reported a 10% increase in sales to $148bn, but this marked a slowdown from the previous quarter. The e-commerce giant forecast further weakening in the months ahead, putting pressure on margins as it invests in areas like artificial intelligence (AI). Intel has struggled to compete with rivals like Nvidia, known for its powerful AI chips, leading to a 1% year-on-year sales decline in the three months to June.
While Intel faces challenges, Apple saw a rebound in sales in the spring, overcoming weaknesses in China and a dip in iPhone sales. Revenues for the company in the three months to June were $85.8bn, up 5% year-on-year, signaling a return to growth after a slump at the start of 2024. Apple’s AI-powered software improvements are attracting customers to upgrade their devices, with the company releasing new features branded as “Apple Intelligence” to developers in the US. These features make it easier for iPhone users to record and transcribe phone conversations, generate personalized emojis, and interact more conversationally with the voice assistant, Siri.
Apple remains optimistic about the potential of AI and plans to continue investing significantly in this technology. Sales of iPhones slipped 1% over the April to June period, but were outweighed by increased sales of Macs and iPads. Additionally, Apple reported an all-time revenue record from its services division, which includes offerings like Apple Pay and Apple News. While Intel faces challenges and is implementing cost-cutting measures, Apple’s focus on AI and ongoing innovation has positioned the company for growth despite market uncertainties.
