The Nasdaq led a tumble in US stocks on Thursday after earnings reports from Meta and Microsoft raised concerns about rising artificial intelligence costs. The tech-heavy Nasdaq Composite sank 2.7%, while the S&P 500 fell nearly 1.9%, with both indexes ending the month slightly in the red. The Dow Jones Industrial Average also notched a monthly loss after dropping 0.9% on Thursday, ending a streak of five straight months of gains.
While the results beat Wall Street estimates, both Meta and Microsoft indicated they would increase spending on AI, which weighed on their stock prices. This cautious outlook spread to other tech giants such as Amazon and Apple, which reported after the market closed on Thursday. Amazon’s mood improved after the tech giant exceeded Wall Street’s expectations for both revenue and earnings per share.
However, Apple reported its earnings per share were slightly affected by a one-time charge related to a European General Court decision. Excluding the charge, Apple’s earnings per share would have surpassed expectations. Investors received the latest reading on the Personal Consumption Expenditures index on the macroeconomic front, providing a key inflation input for the Federal Reserve ahead of its policy decision next week.
Additionally, initial jobless claims declined to a five-month low of 216,000, lower than estimates. Apple announced better-than-anticipated Q4 revenue but noted that an EU charge hurt earnings per share. The company reported earnings per share of $0.97 on revenue of $94.9 billion.
Tech stocks tumble amid AI costs
Without the charge, EPS would have been $1.64, surpassing $1.59 per share expectations. Intel also reported its Q3 earnings, beating revenue expectations but falling short on earnings per share due to impairment charges.
However, its stock jumped on positive Q4 guidance and a beat on data center revenue. For the quarter, Intel reported a loss per share of $0.46 on revenue of $13.28 billion. Amazon’s stock popped by 5% after reporting stronger-than-expected revenue and earnings for the third quarter.
The company said it expects revenue in the range of $181.5 billion to $188.5 billion in the fourth quarter. Technology stocks overall led market declines on Thursday. Microsoft’s stock fell more than 5% after its quarterly results, and Meta’s stock dropped roughly 4% after indicating increased spending on AI infrastructure next year.
Nvidia also declined by more than 4%, alongside other semiconductor stocks. The October jobs report, expected to be released Friday morning, is anticipated to show a significant slowdown in job growth, reflecting the impact of recent hurricanes and a Boeing strike. Consistent with this, mortgage rates rose for the fifth straight week amid pre-election volatility, impacting the bond market.
Thursday’s market activity underscored investor concerns about rising costs and spending in the tech sector, even as earnings generally exceeded expectations.
