AI Cost Concerns Weigh Down Wall Street Performance

Wall Street opened Monday with a dip due to warnings from Meta Platforms and Microsoft about rising AI-related costs. Despite favorable earnings, both stocks fell. Meanwhile, inflation data aligned with expectations, and unemployment claims fell. Investors remain cautious as tech stocks face pressure to significantly outperform.

Wall Street prepared for a downturn on Thursday after Meta Platforms and Microsoft issued warnings about escalating AI expenses, tempering some of the excitement surrounding megacap stocks that have powered market growth this year.

Meta's shares dipped by 1.4% and Microsoft saw a 3.5% fall in premarket trading, despite both companies exceeding earnings estimates. Inflation news, showing a 0.2% increase in the Personal Consumption Expenditures price index for September, aligned with expectations and suggested potential easing by the Federal Reserve.

Meta forewarned significant AI infrastructure investments while Microsoft predicted slower Azure growth, both leading tech stocks to decline. The market responded unfavorably to stocks that didn't significantly outperform, emphasizing the high expectations placed on AI-driven growth.

(With inputs from agencies.)