BY COMFORT OGBONNA

On Tuesday, AI-related companies experienced a significant setback, losing $190 billion in stock market value following disappointing quarterly results from Microsoft, Alphabet, and Advanced Micro Devices. The decline in stock prices reflected investors’ heightened expectations after a recent AI-driven market surge that had propelled these companies’ stocks to unprecedented levels, promising widespread incorporation of AI technology in corporate settings.

Alphabet saw a 5.6% drop as its December-quarter ad revenue fell short of expectations. The company also announced increased spending on data centers to support its AI initiatives, emphasizing the competitive costs in its rivalry with AI contender Microsoft. Although Google Cloud’s revenue growth slightly exceeded Wall Street targets, Microsoft’s Azure outpaced it.

Microsoft, despite beating analyst estimates for quarterly revenue, experienced a 0.7% decline in its stock during extended trading. The initial intra-day record high earlier in the day was short-lived, as investors were less impressed despite the positive impact of new AI features attracting customers to Microsoft’s cloud and Windows services.
Optimism regarding AI propelled Microsoft’s stock market value above $3 trillion this month, surpassing Apple.

However, chipmaker Advanced Micro experienced a 6% decline as its first-quarter revenue forecast fell short of estimates, despite anticipating robust sales for its AI processors. Nvidia, whose shares surged 27% in January amid AI optimism, retraced some of those gains in extended trade, currently down over 2%. Server manufacturer Super Micro Computer, another beneficiary of AI-related demand, declined over 3%. It had achieved a record high earlier on Tuesday after reporting impressive quarterly results the day before.