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

Indexes: videochatforum.ro 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 reject disappointing Alphabet incomes and weighed the possibility of future interest rate 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 showed signs of healing after being rocked recently following the soaring popularity of a low-priced Chinese expert system design developed by startup DeepSeek. Nvidia, which signed up one of the biggest 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 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, meanwhile, lost 8.2% after CEO Lisa Su said the business’s current-quarter information center sales - a proxy for its AI income - would fall about 7% from the previous quarter.

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

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

“There are some issues that the Fed might need to reduce quicker, that the economy is slowing, however that ´ s in fact favorable news for the markets 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 a rate cut then, 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, however flagged uncertainty around the effect of new tariffs, nerdgaming.science migration, guidelines 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 realty and energy 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 preparing for a possible investigation of the iPhone maker.

Fiserv advanced 7.3% as the payments firm beat estimates for fourth-quarter profit, 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 hurry to speak to Chinese President Xi Jinping to try to defuse a brand-new trade war in between the nations.

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

In corporate movers, FMC Corp plunged 32% after the agrichemicals producer projection first-quarter earnings listed below estimates.

Johnson Controls leapt 12.5% as the building options business named Joakim Weidemanis as president and raised its 2025 profit 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 brand-new 52-week highs and 12 brand-new lows while the Nasdaq Composite recorded 100 new highs and trade-britanica.trade 85 new lows.

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