Stocks Fall as Alphabet, AMD Results Fuel AI Angst
Stocks dropped as underwhelming results from Alphabet Inc. and Advanced Micro Devices Inc. revived concern about when the billions of dollars spent by the tech industry on artificial intelligence will start to pay off.
Big tech led losses in equities, with a gauge of the “Magnificent Seven” megacaps down 1.6%. Google’s parent Alphabet was on pace for its worst slide in more than a year after its cloud unit — the clearest indicator of how AI is contributing to the company’s sales — slowed down. AMD sank 10% after a disappointing outlook for its data center business, an area where it’s struggling to catch up with AI computing leader Nvidia Corp.
The Magnificent Seven have driven the S&P 500’s earnings expansion and equity returns, with the group comprising about one-third of the benchmark’s weight. They’ve made up more than half of the index’s gains over the past two years, but their profit growth is decelerating just as their spending rises. The concerns raise a threat to their lofty valuations, given the group trades at a 40% premium to the broader S&P 500 based on forward price-to-earnings ratios.
The S&P 500 fell 0.2%. The Nasdaq 100 lost 0.5%. The Dow Jones Industrial Average was little changed.
Source : Bloomberg
