Alphabet falls almost 8% after downbeat earnings, heavy AI spend

Indexes: Dow up 0.47%, S&P 500 up 0.19%, Nasdaq down 0.07%

(Updates since 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 incomes and weighed the possibility of future interest rate cuts from the U.S. Federal Reserve.

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

showed indications of healing after being rocked last week following the soaring popularity of a low-priced Chinese expert system model developed by startup DeepSeek. Nvidia, which registered among the greatest losses, was up 3.3% on Wednesday.

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

On the information front, investors are expecting 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, assisting curb cost growth, a report from the Institute for Supply Management revealed on Wednesday.

"There are some concerns that the Fed may need to ease much faster, that the economy is slowing, but that ´ s in fact positive news for the markets because they ´ re searching for those Fed rate cuts," Haworth said.

The next Federal Open Markets Committee meeting remains in March, and while just 16.5% of traders expect a rate cut then, a majority 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, migration, regulations 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%, to 19,641.11.

Nine of the 11 S&P 500 sectors traded higher, with property 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 company beat estimates for fourth-quarter profit, assisted by strong demand 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 to Chinese President Xi Jinping to attempt to pacify a brand-new trade war 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 producer projection first-quarter earnings listed below estimates.

Johnson Controls jumped 12.5% as the building solutions company called Joakim Weidemanis as chief executive officer and raised its 2025 revenue projection.

Advancing issues 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 brand-new 52-week highs and 12 brand-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)