GitLab

Alphabet falls almost 8% after downbeat incomes, heavy AI spend

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

(Updates as of mid afternoon)

By Abigail Summerville and Shashwat Chauhan

The S&P 500 and the Dow increased on Wednesday, as investors began to brush off 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 profits growth on Tuesday and earmarking a higher-than-expected $75 billion financial investment for larsaluarna.se its AI buildout this year.

AI-related stocks revealed signs of recovery after being rocked recently following the skyrocketing appeal of a low-cost Chinese artificial intelligence model developed by startup DeepSeek. Nvidia, which signed up one of the most significant losses, was up 3.3% on Wednesday.

"Ultimately, need is not disappearing for AI even with the DeepSeek news. They ´ re all going to need to spend 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, on the other hand, lost 8.2% after CEO Lisa Su said the company's current-quarter data center a proxy for its AI profits - would fall about 7% from the previous quarter.

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

U.S. services sector activity suddenly slowed in January amid cooling need, helping curb rate development, a report from the Institute for Supply Management showed on Wednesday.

"There are some issues that the Fed might require to alleviate quicker, 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 anticipate a rate cut then, a bulk of traders prepare for 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 impact of new tariffs, immigration, regulations and other efforts 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 utahsyardsale.com 0.47%, to 44,763.57, the S&P 500 gained 11.61 points, or 0.19%, trademarketclassifieds.com to 6,049.49 and the Nasdaq Composite lost 12.91 points, or dokuwiki.stream 0.07%, to 19,641.11.

Nine of the 11 S&P 500 sectors traded higher, with real estate and energy stocks leading the gains while communication services fell over 3%.

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

Fiserv advanced 7.3% as the payments company beat quotes for hikvisiondb.webcam fourth-quarter earnings, helped by strong demand in its banking and humanlove.stream payments processing unit.

Markets also await developments on the tariffs front after Trump said on Tuesday he remained in no rush to speak to Chinese President Xi Jinping to attempt to defuse a brand-new trade war between the nations.

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 producer forecast first-quarter income listed below estimates.

Johnson Controls leapt 12.5% as the building options business named Joakim Weidemanis as chief executive officer and raised its 2025 earnings forecast.

Advancing issues surpassed 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 posted 31 new 52-week highs and 12 new lows while the Nasdaq Composite recorded 100 brand-new highs and valetinowiki.racing 85 new lows.

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