Alphabet falls nearly 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 brush off disappointing Alphabet revenues and weighed the prospect of future interest rate cuts from the U.S. Federal Reserve.

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

AI-related stocks showed indications of healing after being rocked last week following the soaring appeal of an inexpensive Chinese expert system design developed by start-up DeepSeek. Nvidia, wiki.snooze-hotelsoftware.de which signed up one of the most significant losses, was up 3.3% on Wednesday.

“Ultimately, demand is not disappearing 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 financial 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 information center sales - a proxy for its AI profits - would fall about 7% from the previous quarter.

On the information front, financiers are expecting the January nonfarm payrolls report, expected to be released on Friday.

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

“There are some issues that the Fed may require to alleviate much faster, that the economy is slowing, however that ´ s really favorable news for the marketplaces due to the fact that they ´ re looking 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, 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 impact 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 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 greater, with property and utility 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 estimates for fourth-quarter revenue, helped 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 rush to speak to Chinese President Xi Jinping to attempt to pacify a new trade war in between the nations.

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

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

Johnson Controls jumped 12.5% as the structure options business named Joakim Weidemanis as president and raised its 2025 revenue projection.

Advancing concerns 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 brand-new 52-week highs and 12 new lows while the Nasdaq Composite taped 100 new highs and 85 new lows.

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