Alphabet earnings drag Wall Street lower as AI costs weigh on tech

Wall Street’s main stock indices fell on Thursday as investors sold shares in Alphabet, the parent company of Google, after the firm reported lower-than-expected profits while maintaining high spending on artificial intelligence. Alphabet shares plunged 12 percent, dragging the tech-heavy Nasdaq Composite down 1.3 percent in midday trading.

The sell-off extended to other major technology firms and industrial companies as concerns grew over the sustainability of the global tech boom. Caterpillar, the second-largest stock on the Dow, also fell as higher borrowing costs driven by AI infrastructure spending increased its debt financing expenses. Shares in Microsoft initially rose on strong revenue but later slipped into negative territory.

Global markets reflected similar caution, with South Korea’s Kospi index closing down 1.2 percent after Samsung Electronics missed market expectations in its semiconductor division despite record quarterly profits. In Europe, the European Central Bank left interest rates unchanged, while Federal Reserve officials maintained US borrowing costs, citing the need for more data on inflation which remains above the two-percent target.

Read the full story at afp.com.