STORY: Wall Street’s main indexes closed higher on Wednesday as investors brushed off disappointing earnings
from Alphabet and weighed the prospect of future interest rate cuts from the Federal Reserve.
The Dow gained about seven-tenths of a percent, the S&P 500 added about four-tenths and the Nasdaq ticked up roughly two-tenths of a percent.
Google-parent Alphabet dropped about 7% a day after posting downbeat cloud revenue growth and earmarking a higher-than-expected $75 billion investment in AI this year.
Alphabet’s results came after Chinese startup DeepSeek last week rocked shares of rival AI companies, such as Nvidia, after it launched what it claimed to be a low-cost AI model.
Kevin Mahn is chief investment officer at Hennion & Walsh Asset Management.
“Clearly, investors are beginning to now question the overall health of the AI revolution and whether or not all of the spending that’s taking place as it relates to AI infrastructure is warranted given the purported success of DeepSeek, as we learned just over a week ago. I would argue, however, that the bigger risk is not investing into AI, because the longer that you wait, the more likely your competitors are going to invest in AI, and that’s going to move them forward significantly.”
In other tech news, shares of Advanced Micro Devices fell after the chipmaker’s CEO said current-quarter data center sales – a proxy for its AI revenue – would drop about 7% from the previous quarter.
Apple shares ended slightly lower after Bloomberg News reported that China’s antitrust regulator was preparing for a possible investigation into the iPhone maker.
And shares of Uber dropped more than 7.5% after the ride-hailing firm forecast current-quarter bookings below estimates.
On the data front, the Institute for Supply Management said services sector activity unexpectedly slowed in January amid cooling demand.
Investors now look to Friday’s nonfarm payrolls report for January for further clues on Fed policy, with a majority of traders expecting this year’s first interest rate cut to come in June.
