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 as of mid afternoon)

By Abigail Summerville and Shashwat Chauhan

The S&P 500 and the Dow rose on Wednesday, as financiers started to brush off disappointing Alphabet earnings and weighed the possibility of future rate of interest cuts from the U.S. Federal Reserve.

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

AI-related stocks revealed signs of recovery after being rocked recently following the soaring popularity of an affordable Chinese artificial intelligence design developed by start-up DeepSeek. Nvidia, which registered among 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 have to invest more cash and that ´ 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, utahsyardsale.com lost 8.2% after CEO Lisa Su said the company's current-quarter data center sales - a proxy for its AI profits - would fall about 7% from the previous quarter.

On the data 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 rate development, a report from the Institute for Supply Management showed on Wednesday.

"There are some issues that the Fed might require to alleviate faster, that the economy is slowing, however that ´ s actually favorable news for the marketplaces since they ´ re looking for those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while only 16.5% of traders expect a rate cut then, a majority 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 effect of new tariffs, akropolistravel.com migration, guidelines 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, users.atw.hu 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 real estate 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 drapia.org was preparing for a possible examination of the iPhone maker.

Fiserv advanced 7.3% as the payments firm beat price quotes for fourth-quarter earnings, helped by strong demand in its banking and payments processing unit.

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

The Cboe Volatility Index, library.kemu.ac.ke understood as Wall Street's worry gauge, dropped 6.3% to 16.1 today.

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

Johnson Controls leapt 12.5% as the structure solutions business named Joakim Weidemanis as ceo and raised its 2025 profit forecast.

Advancing concerns 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 posted 31 brand-new 52-week highs and 12 brand-new lows while the Nasdaq Composite recorded 100 new highs and 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)