Stocks on Wall Street close lower as Meta and Microsoft shine a spotlight on the expenses of AI

Stocks on Wall Street decline due to rising costs of artificial intelligence investments by Meta and Microsoft: Reuters

Wall Street closed lower on Tuesday as investors digested the latest earnings reports from tech giants Meta Platforms Inc and Microsoft Corp, which highlighted the rising costs associated with artificial intelligence (AI) technology.

Meta, formerly known as Facebook, reported a 31% increase in expenses in the fourth quarter, driven by investments in AI and other technologies. The social media company also warned that costs related to AI research and development would continue to weigh on its bottom line in the near future.

Meanwhile, Microsoft’s earnings beat expectations, but the company’s cloud computing division saw higher-than-expected costs related to AI and other emerging technologies. Despite strong revenue growth, investors were concerned about the impact of these rising expenses on the company’s profitability.

The news sent tech stocks lower, with the Nasdaq Composite falling 1.3% and the S&P 500 technology sector dropping 2.1%. The Dow Jones Industrial Average also closed in the red, down 0.4%.

Investors are keeping a close eye on how companies are managing the costs associated with AI technology, which is becoming increasingly important in a wide range of industries. While AI has the potential to drive innovation and efficiency, it also requires significant investment in research and development.

As companies continue to invest in AI and other emerging technologies, investors will be watching closely to see how these expenses impact their bottom lines. The market’s reaction to Meta and Microsoft’s earnings reports serves as a reminder of the challenges and opportunities that come with the adoption of AI.

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