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Alphabet falls almost 8% after downbeat profits, 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 rose on Wednesday, as financiers began to brush off 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 posting downbeat cloud earnings growth on Tuesday and allocating a higher-than-expected $75 billion investment for its AI buildout this year.

AI-related stocks revealed signs of recovery after being rocked last week following the soaring popularity of an inexpensive Chinese expert system model established by startup DeepSeek. Nvidia, which registered one of the biggest losses, was up 3.3% on Wednesday.

"Ultimately, demand is not going away 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, 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 revenue - would fall about 7% from the previous quarter.

On the data front, financiers are looking ahead to the January nonfarm payrolls report, expected to be launched on Friday.

U.S. services sector activity unexpectedly slowed in January in the middle of cooling demand, helping curb cost development, a report from the Institute for Supply Management revealed on Wednesday.

"There are some issues that the Fed may need to relieve much faster, that the economy is slowing, but that ´ s really positive news for the markets since they ´ re searching for those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee conference remains in March, and while only 16.5% of traders expect a rate cut then, a bulk 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 new tariffs, immigration, 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, or 0.47%, to 44,763.57, the S&P 500 gained 11.61 points, or sincansaglik.com 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 higher, 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 was getting ready for a possible examination of the iPhone maker.

Fiserv advanced 7.3% as the payments company beat price quotes for fourth-quarter profit, assisted 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 talk to Chinese President Xi Jinping to attempt to defuse a brand-new trade war in between the countries.

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 manufacturer projection first-quarter income below price quotes.

Johnson Controls leapt 12.5% as the structure services business called Joakim Weidemanis as president and raised its 2025 profit projection.

Advancing concerns surpassed decliners by a 2.62-to-1 ratio on the New Exchange, and pipewiki.org 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 taped 100 brand-new highs and 85 brand-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)