Alphabet falls nearly 8% after downbeat profits, 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 increased on Wednesday, as financiers began to brush off frustrating Alphabet revenues and weighed the possibility of future rates of interest cuts from the U.S. Federal Reserve.

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

AI-related stocks showed indications of healing after being rocked last week following the skyrocketing appeal of an inexpensive Chinese artificial intelligence design established by start-up DeepSeek. Nvidia, which signed up among the biggest losses, was up 3.3% on Wednesday.

"Ultimately, demand is not disappearing for AI even with the DeepSeek news. They ´ re all going to need to spend more money and that ´ s what the AI story has actually been. This is a fairly long cycle story," said Rob Haworth, senior 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 information center sales - a proxy for its AI revenue - would fall about 7% from the previous quarter.

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

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

"There are some issues that the Fed may require to ease much faster, that the economy is slowing, but that ´ s actually positive news for the marketplaces because 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 anticipate a rate cut then, a majority of traders expect a cut in June, according to CME's FedWatch Tool.

president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, however flagged uncertainty around the impact of new tariffs, immigration, policies and other initiatives from U.S. President Donald Trump's administration.

At 2:00 p.m. ET (1900 GMT), the Dow Jones Industrial Average rose 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%, systemcheck-wiki.de to 19,641.11.

Nine of the 11 S&P 500 sectors traded higher, with real estate and utility stocks leading the gains while interaction services fell over 3%.

Shares of Apple slipped 1.2% as Bloomberg News reported that China's antitrust regulator was preparing for a possible examination of the iPhone maker.

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

Markets also await advancements 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 nations.

The Cboe Volatility Index, called Wall Street's worry gauge, dropped 6.3% to 16.1 today.

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

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

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 brand-new lows while the Nasdaq Composite tape-recorded 100 new highs and 85 new lows.

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