U S stocks fell as investors grew concerned about the massive spending on artificial intelligence by major technology companies. Microsoft led the decline with a sharp drop in its shares despite reporting strong revenue and profit growth. The company revealed record capital expenditure to build AI data centers and chips, raising questions about how quickly these investments will generate returns.
The broader tech sector also experienced pressure as markets reassessed the balance between growth and profitability. Companies that showed clearer near term profitability performed better, while those with heavy AI investment plans faced selling pressure.
Investors are watching closely to see how the AI spending narrative will play out. While massive investments can drive future growth, they also create short term anxiety over returns and margins. As some money rotated into sectors like energy and industrials, the market demonstrated that careful evaluation of earnings and spending remains crucial.
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