Wall Street Falls As Alphabet Revenue Miss Sparks AI Spending Worries

US stock prices closed lower on Thursday as investors re-examined massive technology spending on artificial intelligence following disappointing quarterly results from Google parent Alphabet. According to Livemint and Reuters reporting, the Nasdaq Composite dropped 1.66 percent to 26,108.35, while the S&P 500 lost 0.63 percent to 7,695.25 and the Dow Jones Industrial Average fell 0.59 percent to 52,163.07. Alphabet shares slid 13.2 percent after its revenue shortfall was compounded by accelerated AI-related cash burn. Software and semiconductor stocks also declined, with chip stocks dropping 2.0 percent as markets separated companies that self-fund tech projects from those relying on borrowed funds. In contrast, the small-cap Russell 2000 advanced 0.8 percent, and healthcare led the S&P 500 gainers.

Market Data

Economic data released on Thursday showed the US economy grew at an annualized rate of 3.4 percent in the third quarter, surpassing analyst expectations. Federal Reserve policymakers chose to hold interest rates steady on Wednesday while acknowledging that price pressures remain elevated due to factors including a war-related oil supply crunch. Meanwhile, third-quarter earnings season crossed the halfway point with 253 S&P 500 companies reporting, of which 81 percent beat expectations according to LSEG data.

Context

Major stock market indexes often react sharply to earnings reports from giant technology companies because these firms make up a huge share of total market value. When investors worry about high spending on new technologies like artificial intelligence, they frequently shift funds into smaller companies or defensive sectors like healthcare until the financial returns become clearer.