Wall Street Stumbles as AI Cost Warnings Weigh on Tech Giants

Wall Street faced significant declines following warnings from Microsoft and Meta Platforms about increasing AI costs, impacting their stock values. Despite better-than-expected earnings, their guidance on AI investments raised investor concerns. The Information Technology sector saw a notable slump, contributing to the overall market downturn.

In a significant market movement, Wall Street experienced a downturn as major tech companies Microsoft and Meta Platforms issued warnings about rising AI expenses. Despite both companies surpassing earnings predictions, the cautionary guidance on AI investments sent their stocks sliding.

The broader stock market was adversely affected, with major indices reporting losses. Meta dropped 4% and Microsoft fell by 5.6%, contributing to the tech sector's steep 3.3% decline, marking its worst performance since early September. Analyst Quincy Krosby from LPL Financial remarked that the market was disappointed with tech's future outlook.

Adding to market pressures, the 10-year Treasury note yield climbed above 4.3%. Meanwhile, economic indicators showed mixed results, with the Personal Consumption Expenditures price index aligning with expectations, yet core inflation figures slightly exceeded forecasts. Despite this uncertainty, a rate cut by the Federal Reserve is anticipated in their upcoming meeting.

(With inputs from agencies.)