Traders work on the floor of the New York Stock Exchange on Jan. 28, 2025 in New York City.
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Stock futures fell Wednesday after mixed quarterly figures from Alphabet and chipmaker AMD led the tech sector lower. A decline in Apple also put pressure on futures.
S&P 500 futures and Nasdaq 100 futures slid 0.4% and 0.8%, respectively. Dow Jones Industrial Average futures was lower by 39 points, or 0.1%.
Alphabet shares tumbled 7% after the Google-parent posted a cloud revenue miss as it ramps up spending on artificial intelligence, spooking investors who worried the megacap tech company will take longer to capitalize on its AI ambitions. Overall revenue for the period also came up short.
“These companies, the hyper scalers, are damned if they do and damned if they don’t, because they have to spend a lot to remain competitive, but they are cutting into their cash flow,” Bank of America’s Savita Subramanian said Tuesday on CNBC’s “Fast Money.”
“I don’t think it’s game over for big cap tech. I think these are big companies with lots of optionality. They can do what they did in 2023, cut costs, they can shore up balance sheets, do big buybacks, and they’re doing a lot of that,” the firm’s head of U.S. equity and quantitative strategy continued. “But they have to hire more, they have to spend more. It’s not the same profit story that it used to be.”
Alphabet
AMD shares were also lower by 8% after the company’s fourth-quarter data center revenue came up short of expectations.
The Technology Select Sector SPDR Fund shed 0.6% in the premarket as a result. Adding to techs troubles was Apple, which dropped 2.7% after Bloomberg News reported that regulators in China were considering launching a formal investigation into the company’s App Store fees and policies.
This comes as trade tensions between China and the U.S. increase. Over the weekend, the U.S. unveiled a 10% levy on Chinese imports. China retaliated with tariffs of up to 15% on U.S. goods.
Wall Street is coming off a positive session. The Nasdaq Composite and S&P 500 rose Tuesday, gaining nearly 1.4% and 0.7%, respectively. The 30-stock Dow climbed 134 points, or 0.3%. The S&P 500 and Nasdaq were bolstered in part by strong results from Palantir, which hit a fresh record high during the session.
