Stocks Fall as Concerns Linger Over Tech Giants' AI Investments

Summary:

The U.S. stock market declined on Wednesday as disappointing earnings reports from Alphabet and Advanced Micro Devices reignited apprehensions about the profitability of massive investments in artificial intelligence (AI). The "Magnificent Seven" megacaps, which have been the driving force behind the S&P 500's recent performance, faced steep losses, led by Alphabet's cloud unit and AMD's data center business.

Key Points:

* The S&P 500 dropped 0.2%, with the tech-heavy Nasdaq 100 losing 0.5%.
* Alphabet's shares plummeted after its cloud revenue growth slowed down.
* AMD sank 10% following a disappointing outlook for its data center segment.
* The Magnificent Seven have played a significant role in the S&P 500's earnings and return growth but are now facing decelerating profit growth and rising expenses.
* Their premium valuations are facing scrutiny as skeptics question the justification for their massive AI investments.
* Other corporate highlights include:
* Potential Apple antitrust probe in China.
* Chipotle's sales growth falls short of expectations.
* Disney reports strong results driven by Moana 2 and streaming services.
* Electronic Arts provides context on EA Sports FC's underperformance.
* Match Group appoints new CEO.
* Uber's earnings and operating income fall below estimates.

Market Movements:

* The Bloomberg Dollar Spot Index declined 0.2%.
* The euro and British pound gained against the dollar.
* Bitcoin and Ether rose on the cryptocurrency market.
* Gold prices increased, while oil prices fell.

Key Events This Week:

* Eurozone retail sales (Thursday)
* UK rate decision (Thursday)
* Amazon earnings (Thursday)
* US nonfarm payrolls and unemployment (Friday)