Tech Giants Struggle Amidst AI Investing Uncertainties

Wall Street saw a downturn as Tech giants like Microsoft and Alphabet faced losses amid escalating AI investments. Alphabet's planned $185 billion capex for AI raised investor concerns, affecting shares across the board. Market sentiment shifted, apprehensive of AI's impact on traditional software sales and its profitability outcomes.

Wall Street witnessed a significant downturn on Thursday, with the Nasdaq hitting its lowest level since November. This decline was largely attributed to the steep fall in shares of major tech companies like Microsoft and Amazon, following Alphabet's announcement of potentially doubling its capital expenditure on artificial intelligence.

Alphabet's shares dropped by 4.2% as the tech giant revealed plans to allocate up to $185 billion towards AI investments by 2026. In tandem, Big Tech rivals are projected to spend over $500 billion on AI this year. However, this surge in AI spending has sparked investor concerns about its impact on profits, adding to recent market volatility.

The apprehension regarding AI's profitability has influenced software and data services stocks, which have seen an uptick in losses. Investors are increasingly doubtful about the long-term financial benefits of these AI investments, leading to market rotation towards relatively cheaper stocks in recent days.

(With inputs from agencies.)