Wall Street Shaken by AI Spending Skepticism
Wall Street anticipates a lower opening due to concerns over Alphabet's spending and Qualcomm's forecast. The AI investment race prompts investor anxiety about profitability and valuations. Meanwhile, traditional software stocks stabilize, but silver and crypto-linked stocks suffer losses. Market skepticism persists as AI disrupts the tech landscape.
Wall Street braced for a downturn on Thursday as investor anxieties resurfaced, spurred by Alphabet's aggressive capital-expenditure plans and a disheartening forecast from Qualcomm. Software shares regained balance after a challenging week marked by significant selloffs.
Alphabet's stock plummeted nearly 5% during premarket trading following its announcement to double capital expenses, reflecting a relentless ambition in the AI sector. This triggered pressure on major tech players, with Microsoft, Tesla, and Meta all shedding 2%. The tech industry is projected to invest over $500 billion in AI this year, intensifying questions about the rapid transition of spending into measurable returns.
Amid skepticism surrounding AI investments, traders minimized their exposure to expensive AI stocks. Consequently, sectors like silver and crypto-linked stocks experienced declines. Conversely, the S&P 600 small-cap index achieved a 0.9% rise, while S&P 500 and 400 indexes also showed gains, indicating a shift toward undervalued market segments.
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