- AI companies lose $190 billion in value after reports from Alphabet, Microsoft, and others.
- Alphabet's ad revenue misses expectations; Microsoft and AMD also disappoint investors.
- Shares of Nvidia and Super Micro Computer fall after initial gains.
February 1, 2024: AI-related companies faced a big setback, losing $190 billion in market value late Tuesday. This happened after Microsoft, Alphabet (Google’s parent company), and Advanced Micro Devices (AMD) shared their quarterly results, which did not meet investors’ high expectations.
These investors had driven the stocks of these companies to new highs, hoping that the use of AI technology would bring great benefits.
The drop in stock prices followed the earnings reports of these tech giants, showing that investors were expecting more from companies benefiting from the recent AI boom.
Alphabet saw a 5.6% drop in its stock price because its ad revenue for the December quarter was below what people expected.
Alphabet also mentioned that it would spend more on data centers to support its AI projects, showing the high costs of competing with Microsoft in AI technology.
While Google Cloud made a little more money than expected because of interest in AI, Microsoft’s Azure cloud service grew even faster.
Microsoft’s overall revenue was higher than what analysts predicted, helped by new AI features that attracted more customers. However, its stock price dropped slightly after the news.
The excitement around AI had pushed Microsoft’s stock value above $3 trillion earlier this month, making it more valuable than Apple.
But after these reports, the optimism faded a bit. AMD’s stock also fell by 6% because its revenue forecast for the next quarter was lower than expected, even though it predicted strong sales for its AI processors.
Nvidia, whose stock had gone up 27% in January after tripling last year due to AI enthusiasm, saw its stock price drop by more than 2%.
Super Micro Computer, which makes servers and had seen its stock reach a record high after great quarterly results, also saw a drop of over 3%.
This big loss in market value for AI companies shows that even though there’s a lot of hope for the future of AI, the path might have some bumps along the way.
Investors are watching closely to see if these companies can meet high expectations.
