AI firms lose $190B in market cap after Alphabet, Microsoft report
Words reading “Artificial intelligence”, miniature of robot and toy hand are pictured in this illustration taken Dec 14, 2023. REUTERS/Dado Ruvic/Illustration/File photo
AI-related companies lost $190 billion in stock market value late on Tuesday after Microsoft, Alphabet and Advanced Micro Devices delivered quarterly results that failed to impress investors who had sent their stocks soaring.
The selloff following the tech giants’ reports after the bell underscored investors’ elevated expectations following an AI-fueled stock market rally in recent months that propelled their shares to record highs with the promise of incorporating the technology across the corporate landscape.
Alphabet dropped 5.6 percent after the Google-parent’s December-quarter ad revenue missed expectations.
READ: Google parent Alphabet ad revenue sputters, capex up
Alphabet also said its spending on data centers to support its AI plans would jump this year, highlighting the costs of its fierce competition against AI rival Microsoft.
Optimism about AI
While Google Cloud revenue growth slightly topped Wall Street targets, boosted by interest in AI, Microsoft’s Azure grew faster.
Microsoft beat analyst estimates for quarterly revenue as new AI features helped attract customers to its cloud and Windows services. However, its stock fell 0.7 percent in extended trade after briefly hitting an intra-day record high earlier on Tuesday.
Optimism about AI pushed Microsoft’s stock market value above $3 trillion this month, eclipsing Apple.
READ: Microsoft beats sales expectations on AI strength
Chipmaker Advanced Micro tumbled 6 percent after its forecast for first-quarter revenue missed estimates, even as it projected strong sales for its AI processors.
Shares of Nvidia, which have surged 27 percent in January after more than tripling last year on AI optimism, also gave back some of those gain in extended trade, last down over 2 percent.
Server maker Super Micro Computer, another company that has benefited from AI-related demand, dropped over 3 percent. Earlier on Tuesday, it had climbed to a record high after delivering blowout quarterly results the day before.
