Amazon shares were also down more than 4% after the e-commerce giant reported sales grew 10% to $148bn.
That marked a slowdown from the prior quarter and it forecast further weakening in the months ahead, putting pressure on margins, even as the firm ramps up investments in areas such as artificial intelligence (AI).
Overall, the Dow Jones Industrial Average dropped 1.2%, the S&P 500 slipped almost 1.4% and the Nasdaq dropped 2.3%.
Bets on AI have scrambled markets in recent weeks, as investors grow weary of the heavy cost of such investments and firms seen as losing pace in the AI race are hit hard.
Intel is among the firms that has fallen out of favour, as businesses turn to rival Nvidia, known for its powerful AI chips.
The company said sales fell 1% year-on-year in the three months to June and warned that the second half of the year would be worse than expected.
“Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI,” chief executive Pat Gelsinger wrote in a memo to staff, external.
He said the situation required “bolder actions” and the firm had to “fundamentally change the way we operate”.
Apple, by contrast, said it was well positioned to benefit from the changes, as AI-powered improvements to the company’s software convince customers to upgrade their devices.
The company recently released some of the new features, branded as “Apple Intelligence”, to developers in the US.
The new system makes it easier for iPhone users to record and transcribe phone conversations, generate personalised emojis while messaging and interact more conversationally with the company’s voice assistant, Siri, among other changes.
Apple has said it will be released more widely later this year, but only on its newer devices.
Apple boss Tim Cook said the new features would provide “another compelling reason for an upgrade”. The firm said it expected growth to continue in the months ahead.
“We remain incredibly optimistic about the possibilities of AI and we will continue to make significant investments in this technology,” he said.
Over the April to June period, sales of iPhones slipped 1%, a drop outweighed by increased sales of Macs and iPads.
Apple also reported an all-time record in revenue from its services division, which includes offerings such as Apple Pay and Apple News.
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