Wall Street falls as Alphabet results revive AI spending fears

Summarised from 2 outlets · Updated 29 Oct, 14:53 · Archive

Alphabet shares fell 13 per cent after disappointing search advertising results and surging artificial intelligence spending triggered broader market losses.

US stocks opened lower following Alphabet's disappointing search advertising results, which rekindled worries about soaring artificial intelligence costs. The announcement came as investors also assessed fresh inflation data and the Federal Reserve's decision to keep interest rates unchanged.

Alphabet shares slid 13 per cent and were on track for their steepest one-day fall on record. The company reported disappointing search advertising results and a surge in cash burn as AI-related spending accelerated. The Google parent is on track to lose more than $US500 billion in market value, accounting for most of the over $US693 billion the Nasdaq-100 was set to erase.

Tech analyst Anders Bylund at The Motley Fool said: 'The positive AI effects must stay intact for years to come, or investors in Alphabet (and other hyperscalers) will eventually re-rate the multiples as the bottom-line profits fade.' Microsoft edged 0.5 per cent lower following media reports the company plans to raise at least $US25 billion through its first US investment-grade bond sale in more than nine years, though it delivered strong cash-flow results and forecast strong cloud growth.

Investor enthusiasm for the AI trade was tempered by worries that debt-fuelled spending would be harder to justify as borrowing costs climb. The Philadelphia SE Semiconductor index fell 1.8 per cent whilst software stocks traded sharply lower, with cybersecurity firm Fortinet slipping 21.7 per cent and ServiceNow dropping 23.3 per cent after missing profit estimates.

How it is being reported

• Wall St slides as Alphabet results revive AI cost fearsUS stocks have opened lower as investors digested Alphabet's search advertising results amid concerns about artificial intelligence-related spending.Perth Now · 29 Oct, 14:39
• Wall St slides as Alphabet results revive AI cost fearsUS stocks have opened lower as investors digested Alphabet's search advertising results amid concerns about artificial intelligence-related spending.The West Australian · 29 Oct, 14:39

In this story: Alphabet · Google · Microsoft · Anthropic · Fortinet · ServiceNow · Federal Reserve

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