Nasdaq drops more than 1% after Alphabet earnings report reignites fears about AI
Shares of Google's parent company fall more than 12% as lower-than-expected search advertising and AI spending pressure cash flow
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM INFOMONEY · 3 MIN
The Nasdaq fell more than 1% in the trading session on October 29, after the balance sheet of Alphabet, Google's parent company, reignited investors' fears about the return of spending on artificial intelligence. According to InfoMoney, at 11:51 am (Brasília time) the index fell 1.64%, to 26,117.47 points.
Alphabet's shares fell more than 12%, on track for the biggest drop in one day, according to Reuters, and had already fallen around 10% after the previous day's close. The other American indices also operated negatively: the Dow Jones lost 0.37%, to 52,278.97 points, and the S&P 500 fell 0.51%, to 7,704.55 points.
The swing was the trigger, but not the only factor on the radar. According to InfoMoney and Reuters, the market was also evaluating inflation data in the United States, and the Federal Reserve (Fed) had already kept interest rates unchanged before the opening of trading. In a high interest rate environment, growth stocks tend to be more sensitive to any doubts about future earnings.
The numbers that weighed came from the report itself. Search advertising was lower than expected, and cash burn accelerated with AI spending. On the positive side, Google Cloud revenue more than doubled, but this advance was not enough to alleviate the negative reading about the core of the business.
According to Dave Wagner, manager at Aptus Capital Advisors, the market wants to see the search accelerate again, because there is fear that AI itself will cannibalize the company's main business. The dilemma is to invest heavily in technology without eroding the main source of revenue that finances this bet.
What changes for the investor
For those who follow the stock market, dollar and interest rates, the episode indicates that the market began to demand concrete results from spending on artificial intelligence, and not just promises of growth. As the Nasdaq concentrates technology companies, the fall of a giant in the sector tends to have repercussions on the index and the mood with risky assets. It is worth monitoring upcoming balance sheets, US inflation data and signals from the Fed, which define the cost of money and influence the appetite for growth stocks. This text is informative and does not constitute a recommendation to buy or sell assets.
Automatically translated from Portuguese.
