Alphabet falls almost 8% after downbeat incomes, 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 increased on Wednesday, as investors began to brush off disappointing 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 development on Tuesday and allocating a higher-than-expected $75 billion financial investment for its AI buildout this year.

AI-related stocks revealed indications of recovery after being rocked last week following the skyrocketing popularity of a low-cost Chinese expert system design established by startup DeepSeek. Nvidia, which registered one of the greatest losses, was up 3.3% on Wednesday.

“Ultimately, need is not going away for AI even with the DeepSeek news. They ´ re all going to have to spend more cash and that ´ s what the AI story has been. This is a fairly long cycle story,” said Rob Haworth, senior financial investment strategist at U.S. Bank Asset Management.

Advanced Micro Devices, setiathome.berkeley.edu meanwhile, lost 8.2% after CEO Lisa Su said the company’s current-quarter information center sales - a proxy for its AI profits - would fall about 7% from the previous quarter.

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

U.S. services sector activity all of a sudden slowed in January amidst cooling need, helping curb cost development, a report from the Institute for Supply Management revealed on Wednesday.

“There are some concerns that the Fed might require to ease faster, that the economy is slowing, however that ´ s in fact favorable news for the marketplaces since they ´ re searching for those Fed rate cuts,” Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while only 16.5% of traders anticipate a rate cut then, a majority of traders anticipate 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 Trump’s administration.

At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average rose 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 greater, with property 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 getting ready for a possible investigation of the iPhone maker.

Fiserv advanced 7.3% as the payments company beat price quotes for fourth-quarter revenue, helped by strong need in its banking and payments processing system.

Markets also await developments on the tariffs front after Trump said on Tuesday he remained in no rush to talk to Chinese President Xi Jinping to try to pacify a new trade war between the .

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

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

Johnson Controls leapt 12.5% as the structure options company called Joakim Weidemanis as primary executive officer and raised its 2025 revenue projection.

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 new lows while the Nasdaq Composite tape-recorded 100 brand-new highs and 85 brand-new lows.

(Reporting by Abigail Summerville in New York, Shashwat Chauhan and Sukriti Gupta in Bengaluru