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Alphabet falls almost 8% after downbeat revenues, heavy AI invest

Indexes: Dow up 0.47%, S&P 500 up 0.19%, Nasdaq down 0.07%

(Updates since mid afternoon)

By Abigail Summerville and Shashwat Chauhan

The S&P 500 and the Dow rose on Wednesday, as investors started to reject frustrating Alphabet earnings and weighed the prospect of future rates of interest cuts from the U.S. Federal Reserve.

Google-parent Alphabet dropped 7.3% after publishing downbeat cloud revenue growth on Tuesday and earmarking a higher-than-expected $75 billion financial investment for its AI buildout this year.

AI-related stocks revealed signs of healing after being rocked recently following the soaring appeal of an inexpensive Chinese expert system model developed by startup DeepSeek. Nvidia, which registered one of the greatest losses, was up 3.3% on Wednesday.

"Ultimately, demand is not going away for AI even with the DeepSeek news. They ´ re all going to need to spend more money and that ´ s what the AI story has been. This is a fairly long cycle story," said Rob Haworth, senior vmeste-so-vsemi.ru investment strategist at U.S. Bank Asset Management.

Advanced Micro Devices, meanwhile, lost 8.2% after CEO Lisa Su said the business's current-quarter data center sales - a proxy for its AI income - would fall about 7% from the previous quarter.

On the information front, financiers are looking ahead to the January nonfarm payrolls report, anticipated to be launched on Friday.

U.S. services sector activity unexpectedly slowed in January in the middle of cooling need, helping curb price development, a report from the Institute for Supply Management revealed on Wednesday.

"There are some concerns that the Fed may need to reduce faster, that the economy is slowing, however that ´ s really favorable news for the markets since they ´ re searching for those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while just 16.5% of traders expect a rate cut then, bphomesteading.com a majority of traders expect a cut in June, according to CME's FedWatch Tool.

Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, but flagged uncertainty around the effect of brand-new tariffs, immigration, regulations and other initiatives from U.S. President Donald .

At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average increased 207.53 points, or 0.47%, to 44,763.57, the S&P 500 gained 11.61 points, or 0.19%, to 6,049.49 and the Nasdaq Composite lost 12.91 points, or 0.07%, to 19,641.11.

Nine of the 11 S&P 500 sectors traded higher, with realty and utility stocks leading the gains while communication services tipped over 3%.

Shares of Apple slipped 1.2% as Bloomberg News reported that China's antitrust regulator was getting ready for a possible examination of the iPhone maker.

Fiserv advanced 7.3% as the payments company beat quotes for fourth-quarter earnings, assisted by strong need in its banking and payments processing unit.

Markets likewise await developments on the tariffs front after Trump said on Tuesday he remained in no hurry to speak with Chinese President Xi Jinping to try to defuse a new trade war between the nations.

The Cboe Volatility Index, called Wall Street's fear gauge, dropped 6.3% to 16.1 today.

In corporate movers, FMC Corp plunged 32% after the agrichemicals manufacturer projection first-quarter income listed below quotes.

Johnson Controls jumped 12.5% as the structure services company named Joakim Weidemanis as ceo and raised its 2025 revenue forecast.

Advancing issues outnumbered decliners by a 2.62-to-1 ratio on the New York Stock Exchange, and by a 1.88-to-1 ratio on the Nasdaq.

The S&P 500 published 31 new 52-week highs and 12 brand-new lows while the Nasdaq Composite taped 100 new highs and 85 brand-new lows.

(Reporting by Abigail Summerville in New York, Shashwat Chauhan and Sukriti Gupta in Bengaluru; Editing by Pooja Desai, Devika Syamnath, Maju Samuel and Nia Williams)