AI Stocks Fall After Alphabet Earnings Disappoint
By Joe StonorTechnology stocks slid across the globe after earnings from major tech names in the U.S. and Asia reignited worries about how companies can make money from artificial intelligence.Nasdaq futures fell 1.1% as investors honed in on a disappointing set of earnings from Google-parent Alphabet. Despite soaring sales in its cloud-computing business, the company's overall revenue missed Wall Street expectations. Weaker-than-anticipated search sales were behind the miss, with analysts worrying that Alphabet is yet to demonstrate that it can make money from its AI-powered search engine. Alphabet shares fell over 10% in premarket trade, dragging other AI-related stocks down with it.In Asia, South Korean chip maker Samsung Electronics reported a ninefold surge in operating profit, but its shares fell as investors reacted negatively to the company's outlook. The Korean Kospi closed lower, while U.S. chip makers fell back premarket.The results demonstrate that "leadership in the AI race depends not only on having the most exciting technology, but also on turning that technology into profitable growth without overwhelming the balance sheet," Swissquote analyst Ipek Ozkardeskaya said.Elsewhere in equity markets, futures for the S&P 500 fell 0.15%. The Dow Jones Industrial Average looked set for gains, however, with futures for the index rising 0.6%. In Europe, earnings reports drove market moves. The Stoxx 600 added 0.4%.Treasury yields slipped as markets continued to digest Wednesday's Federal Reserve interest-rate hold, and the subsequent press conference from Fed Chairman Kevin Warsh. Market expectations for a December hike dimmed slightly, but remained at 82% probability, according to LSEG. Ten-year Treasury yields fell back below 5%, while 30-year yields traded below 5.300%.Lower oil prices helped ease pressure on Treasurys, with benchmark Brent crude contracts for December delivery falling around 0.7% to around $114.50 a barrel. Investors are looking to the possibility of a revival in peace talks after The Wall Street Journal reported that U.S. Vice President JD Vance sent a letter to Mohsen Rezaei, secretary of Iran's Supreme National Security Council.The dollar nudged higher against a basket of global currencies. Gold contracts were steady at just above $4,000 a troy ounce. Bitcoin fell back, dropping over 1% to trade around $80,150.For the day ahead, investors will look to a rate decision from the European Central Bank and U.S. growth data. Earnings prints come from Amazon, Intel and Blue Owl, among others.Write to Joe Stonor at [email protected]