Alphabet falls nearly 8% after downbeat earnings, heavy AI invest

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 started to reject disappointing Alphabet revenues and weighed the prospect of future rates of interest cuts from the U.S. Federal Reserve.

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

AI-related stocks showed indications of recovery after being rocked recently following the skyrocketing popularity of an inexpensive Chinese expert system model developed by startup DeepSeek. Nvidia, which signed up among 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 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 galgbtqhistoryproject.org investment strategist at U.S. Bank Asset Management.

Advanced Micro Devices, on the other hand, lost 8.2% after CEO Lisa Su said the business's current-quarter data center sales - a proxy for its AI earnings - would fall about 7% from the previous quarter.

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

U.S. services sector all of a sudden slowed in January in the middle of cooling need, assisting curb rate growth, a report from the Institute for clashofcryptos.trade Supply Management showed on Wednesday.

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

The next Federal Open Markets Committee meeting remains in March, and classifieds.ocala-news.com while just 16.5% of traders anticipate a rate cut then, a bulk 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, but flagged uncertainty around the impact of brand-new tariffs, immigration, 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 accc.rcec.sinica.edu.tw 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 genuine estate 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 quotes for fourth-quarter earnings, surgiteams.com 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 hurry to speak with Chinese President Xi Jinping to try to defuse a brand-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 forecast first-quarter profits below estimates.

Johnson Controls jumped 12.5% as the structure options company named Joakim Weidemanis as ceo and raised its 2025 profit projection.

Advancing problems 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 taped 100 brand-new highs and 85 new lows.

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