Stock Market Today: Stocks Waver as Big Tech Slumps on Spending Concerns
Markets seesawed amid worries over massive costs for artificial intelligence and mixed economic news.



Joey Solitro
Equities searched for direction in a volatile Wednesday session as disappointing big tech earnings and soft economic data sparked a rush out of risk assets in the morning. However, a drop in bond yields helped fuel a resurgence in buying later in the day, allowing the major benchmarks to finish in the green.
Stocks sold off sharply at the open after Google parent Alphabet (GOOGL) last night surprised shareholders with its forecast for capital expenditures. The launch of the cost effective DeepSeek AI chatbot has thrown Silicon Valley's playbook of investing scores of billions of dollars into building out pricey data centers into doubt. (See more on GOOGL stock below.)
Adding to the consternation, Advanced Micro Devices (AMD) stock plunged 6.3% after the semiconductor company beat top- and bottom-line expectations for its fourth quarter but came up short of data center revenue expectations.
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Some mixed economic data also weighed on sentiment.
"Investors embraced the risk-off playbook today as lackluster earnings results from Alphabet and Advanced Micro Devices coincided with a weaker-than-expected ISM services print," writes José Torres, senior economist at Interactive Brokers. "Stocks rebounded from earlier lows as lighter capital costs motivate some purchasing."
The blue chip Dow Jones Industrial Average gained 0.7% to end at 44,873, while the broader S&P 500 added 0.4% to 6,061. The tech-heavy Nasdaq Composite rallied in the last 15 minutes of trading to finish up 0.2% at 19,692.
Econ news in focus
The ADP National Employment Report showed that private payrolls increased by 183,000 in January. Although the reading comes ahead of Friday's monthly jobs report, economists generally take the ADP data with a large grain of salt.
"The woeful track record of ADP's data in forecasting private payrolls suggests that its report of robust growth in January private payrolls should be largely ignored," writes Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "Since its methodology was overhauled in August 2022, ADP's forecast error, regardless of sign, has averaged a hefty 85,000 and been as large as 348,000."
Separately, the Institute for Supply Management Services Purchasing Managers Index (PMI) showed that the services sector expanded for a seventh consecutive month in January, registering 52.8%.
"Underlying services inflation is still likely to decline," writes Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "The latest decline in new orders takes that component to a seven-month low and suggests that worries about immigration and trade policy under the new administration are overriding any optimism that businesses might have about the prospect of tax cuts or deregulation."
The economist adds that the headline figure has been a "very poor guide" for consumers' inflation-adjusted spending on services in recent years.
Stocks on the move
Elsewhere in earnings news, Uber Technologies (UBER) declined 7.6% after the ride-hailing company beat top- and bottom-line expectations for its fourth quarter but issued a weaker-than-expected outlook for its first quarter.
For the first quarter, Uber said it expects to achieve gross bookings in the range of $42 billion to $43.5 billion, representing growth of 17% to 21% from the year-ago period. The midpoint of this range, $42.75 billion, came up short of the $43.5 billion in gross bookings Wall Street expected.
Walt Disney (DIS) stock fell 2.4% after the entertainment and media company beat top- and bottom-line expectations for its fiscal 2025 first quarter and reiterated its full-year outlook.
The results topped analysts' expectations. However, Disney ended the first quarter with 124.6 million Disney+ subscribers, down from 125.3 million at the end of the fourth quarter, and 53.6 million Hulu subscribers, up from 52 million.
Disney's reiterated outlook for 2025 calls for high-single digit EPS growth compared to 2024. As a long-time market laggard, DIS stock has a lot of catching up to do.
GOOGL sheds $184 billion
Alphabet (GOOGL) stock tumbled 7.3% after the Google parent beat profit expectations but came up short of revenue expectations for its fourth quarter and issued capex guidance that was well ahead of expectations.
The results were mixed compared with analysts' forecasts. In addition to the top-line miss, accelerated capex spending weighed on the Magnificent 7 stock Wednesday. Indeed, Alphabet unveiled plans to spend approximately $75 billion in capital expenditures in 2025. This capex figure came in well ahead of analysts' expectations for $58.8 billion in spending.
The Mag 7 stocks have powered more than half of the broader market's gains over the past two years, and yet their profit growth is slowing down. That has market participants increasingly worried about rich valuations.
GOOGL's slide – its worst in more than a year – erased $184 billion in market cap, or more than the entire market value of Advanced Micro Devices. Bulls see the selloff as a buying opportunity. Analysts' consensus recommendation on the name stands at Buy, with high conviction, according to S&P Global Market Intelligence.
Past performance is no guarantee of future returns, but being long-term bullish on GOOGL has been a winning strategy. Anyone who put $1,000 into Alphabet stock two decades ago would be sitting on market-crushing returns today.
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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.
A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about markets and macroeconomics.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.
- Joey SolitroContributor
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