GitLab

Alphabet falls nearly 8% after downbeat earnings, heavy AI spend

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 financiers began to reject frustrating Alphabet earnings and weighed the prospect of future rate of interest cuts from the U.S. Federal Reserve.

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

AI-related stocks showed indications of healing after being rocked last week following the soaring appeal of a low-cost Chinese synthetic intelligence model established by startup DeepSeek. Nvidia, which signed up 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 invest more money which ´ s what the AI story has actually been. This is a fairly long cycle story," said Rob Haworth, senior financial investment strategist at U.S. Bank Asset Management.

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

On the data front, investors are expecting the January nonfarm payrolls report, expected to be launched on Friday.

U.S. services sector activity suddenly slowed in January amidst cooling demand, assisting curb rate development, opentx.cz a report from the Institute for Supply Management showed on Wednesday.

"There are some concerns that the Fed may need to relieve quicker, that the economy is slowing, however that ´ s in fact favorable news for the markets due to the fact that they ´ re trying to find those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee conference remains in March, and while just 16.5% of traders expect a rate cut then, a bulk 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, however flagged uncertainty around the effect of new tariffs, migration, and other initiatives from U.S. President Donald Trump's administration.

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 wiki.dulovic.tech the Nasdaq Composite lost 12.91 points, or archmageriseswiki.com 0.07%, to 19,641.11.

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

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

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

Markets also await advancements on the tariffs front after Trump said on Tuesday he remained in no hurry to talk to Chinese President Xi Jinping to try to defuse a brand-new trade war between the countries.

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

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

Johnson Controls jumped 12.5% as the building solutions company named Joakim Weidemanis as president and raised its 2025 profit projection.

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

The S&P 500 published 31 new 52-week highs and 12 new lows while the Nasdaq Composite tape-recorded 100 new highs and 85 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)