The market is focused on capital expenditures by companies for AI. The Nasdaq and the S&P500 fell 2.3% and 1.4%, respectively.
Tech giant Amazon shares fall more than 5% in aftermarket tradingfollowing the publication of a quarterly report that disappointed analysts.
The firm founded by Jeff Bezos registered a Net profit up to US$13.5 billion in the second quarter of the year, more than expected by the market. However, the turnover of the online retail giant, with a turnover of US$148 billion (+10% in one year), was lower than analysts’ projections.
While the market was open on Wall Street, company stocks fell by 1.6%. The meager reports from technology companies were correlated with a The Nasdaq index of the New York Stock Exchange fell by 2.3% and the S&P 500 fell by 1.4%.
“A lot of people look at artificial intelligence and say this is all great, but how can I make money with it?” said Stephen Massocca, a senior vice president at Wedbush Securities in San Francisco.
“In financial terms, companies are probably doing pretty well, but the question is how much is being paid for this?” he added.
AI capital expenditure in the market’s sights
The market had expected Meta and Amazon to be some of the biggest contributors to aggregate S&P 500 earnings growth. However, Alphabet’s results last week showed that robust earnings growth may not be enough for Wall Street.
Alphabet reported a 28% rise in second-quarter profit, beating analysts’ estimates. However, the Shares fell as investors focused on capital expenditures, which nearly doubled from last year, as Google invests heavily in AI infrastructure to keep up with cloud computing rivals Microsoft and Amazon.Alphabet CEO Sundar Pichai defended the company’s spending, saying the risk to Google of not investing in AI was greater than the risk of overinvesting.
Still, spending has become a concern for the tech giants. “With job openings declining in the second quarter,” Bank of America analysts said of Meta’s upcoming report, “we do not anticipate a repeat of the higher Q24 expense guidance, although higher legal and CapEx expenses are risks.”
Source: Ambito
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