Tech Stocks End Weekly Rally on Disappointing Earnings; AI Spending Fears Resurface as Fed Holds Rates Steady

Technology stocks ended their weekly rally after disappointing earnings from two industry giants renewed concerns over the massive corporate investment in artificial intelligence.

Samsung Electronics fell more than 5% after missing profit estimates, dragging the Korea Composite Stock Price Index (KOSPI), a benchmark for the AI industry, down 2.9%. The reversal contrasted sharply with Wednesday’s session, when the index posted its biggest daily gain since July, boosted by strong earnings from chipmaker SK Hynix.

Alphabet Inc. slumped 10% in after-hours trading following weak sales results. The report intensified investor concerns that Google, despite spending hundreds of billions of dollars on AI technology, is losing market share to rivals. Nasdaq 100 futures fell 1.3%, extending losses after three consecutive advances. The MSCI Asia Pacific Index reversed early gains to close 0.7% lower.

Not all news was negative. Microsoft rose 2.9% in after-hours trading, driven mainly by strong cloud sales. Oracle surged 11% earlier after issuing an upbeat long-term free cash flow outlook, while its credit risk indicator posted its largest improvement in nearly nine months.

The latest earnings exposed new cracks in the AI sector, raising questions whether huge technology spending can deliver returns quickly enough to support elevated valuations. Investors worry that investment in chips, data centers and other infrastructure is outpacing revenue growth, leaving tech stocks more vulnerable to earnings disappointments.

In fixed income, short-dated Treasuries held Wednesday’s gains after the Federal Reserve left interest rates unchanged and signaled a possible reduction in policy meetings next year. The interest-rate-sensitive two-year Treasury yield stood at 4.69%.

Oil prices fell as traders assessed new diplomatic efforts in the Middle East to prevent a resumption of U.S. military strikes against Iran. The global benchmark Brent crude dropped 0.5% to $114.80 per barrel.

Still, the macro environment offered little relief. Tensions with Iran are recurring, and any escalation could push oil prices higher, fuel inflation and strengthen the case for keeping borrowing costs elevated.

This week brings a string of central bank decisions. The European Central Bank is expected to announce policy on Thursday, followed by the Bank of Japan on Friday. Both are forecast to hold interest rates unchanged.

Thursday will also bring the release of the Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, which will offer new clues on price pressures in the economy.

The Federal Open Market Committee voted 10–2 to hold the federal funds rate in a range of 3.75% to 4%. Policymakers said in their post-meeting statement that they want to see data from coming weeks before deciding their next move. Fed Chair Kevin Warsh said officials “have made clear that we are prepared to act as needed and have shown a willingness to act.” He added that the Fed would adjust its meeting calendar, with seven of next year’s eight meetings expected to include interest rate decisions.

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