Story: AI stocks plunged late Tuesday, wiping out $190 billion in U.S. stock market value.
This came after major companies’ financial results did not impress investors.
Google’s parent company Alphabet’s stock price fell 5.6% after the company reported lower-than-expected advertising revenue in its most recent quarter.
He also said spending on data centers will skyrocket, highlighting the cost of staying competitive in the AI space.
The technology helped boost revenue from its cloud products, but at a slower pace than its biggest rival, Microsoft.
The Windows maker actually beat quarterly revenue estimates as new AI capabilities helped attract customers to the service.
However, the company’s stock still fell by about 1% in extended trading after warnings that it would incur huge capital costs.
The company is pouring money into data centers to power its chatbots and other products.
Still, Jim Warden, chief investment officer at Wealth Consulting Group, said cloud revenue looks more favorable than retail sales at this point.
“This could become more difficult because consumer spending could slow. We didn’t see much of a change in the fourth quarter, but with interest rates rising, we’re hoping for that. Some people are.”
Chipmaker AMD also took a hit, falling 6% after lower-than-expected first-quarter sales.
The company nearly doubled its sales forecast for AI chips, but Wall Street was betting on more.
Samsung shares subsequently fell in Asian markets as well, dropping more than 1% in early trading on Wednesday.
South Korea’s leading company reported a 34% drop in fourth-quarter profits due to weak consumer demand.
However, the company is also pinning its hopes on artificial intelligence.
The company said it will improve profitability by focusing on products such as chips for generative AI services.
