AI Concerns Dent U.S. Stock Market Rally

Major U.S. stock indexes fell as Microsoft and Meta highlighted rising AI expenses that could hurt profits. While both beat earnings expectations, their shares dropped, impacting other major tech stocks. Investors were concerned about AI costs affecting short-term gains despite potential long-term economic advantages.

In a rocky trading session, major U.S. stock indexes tumbled after tech giants Microsoft and Meta Platforms revealed increasing artificial intelligence expenditures that may affect their profits. The announcements dampened enthusiasm for major tech stocks, which have driven the market rally throughout the year.

Even as Microsoft and Meta exceeded earnings forecasts, their shares suffered declines, pulling other big-name tech stocks down with them. Ahead of important quarterly results, Amazon.com and Apple also witnessed share price drops, while Alphabet saw losses following Tuesday's report.

The cost concerns surrounding AI investments have left investors questioning short-term profitability, despite potential long-term gains for U.S. economic growth. Experts like BMO's Carol Schleif emphasize the significance of these investments, while market volatility increases with the upcoming U.S. presidential election and anticipated Federal Reserve decisions.

(With inputs from agencies.)