Weak financial results from two major sector leaders sparked renewed worries regarding the massive corporate investments going toward artificial intelligence, causing tech shares to drop and halting the week’s upward trend.
Samsung Earnings Miss Estimates and Drag Down the Kospi Index
Samsung Electronics Co. shares dropped more than 5% after profit missed estimates. The decline dragged down the Kospi Index—a bellwether for the AI trade—by 2.9%.
The market drop marked a sharp reversal from Wednesday. On that day, the gauge posted its biggest rally since July, driven by strong earnings reports from chipmaker SK Hynix Inc. that had fueled gains across technology stocks.
To break down Samsung’s earnings performance, Bloomberg’s Yvonne Man and David Ingles spoke with Sanjeev Rana, Head of North Asia Semiconductors Research at CLSA.
The broader MSCI Inc.’s Asia Pacific equities reversed earlier gains to drop 0.7%.
Alphabet Slumps in Extended Trading as AI Spending Fears Mount
Alphabet Inc. slumped 10% in extended trading after sales underwhelmed. The drop reinforced investor fears that Google is losing ground to AI rivals, even as the company pours hundreds of billions of dollars into the technology.
Futures for the Nasdaq 100 Index slid 1.3%. This retreat followed the underlying benchmark climbing for the past three days.
Not all major technology firms struggled. Microsoft Corp. shares rose 2.9% in after-hours trading, supported by solid cloud sales.
Meanwhile, Oracle Corp. earlier surged 11% after issuing a long-term outlook for free cash flow. A gauge of Oracle’s credit risk improved the most in nearly nine months.
Federal Reserve Holds Rates Steady While Signaling Future Increases
Federal Reserve Chairman Kevin Warsh left the central bank on track to raise interest rates again this year. Warsh maintained this stance on Wednesday despite refusing to offer explicit guidance regarding the future path of policy.
Keeping to the strict limits he placed on his own messaging, Warsh pointed to a robust economic outlook and cautioned against ongoing inflation to indicate that the central bank still has work to finish.
Following Wednesday’s decision to leave rates unchanged, that viewpoint solidified projections that policymakers will increase borrowing expenses in December, alongside the possibility of an additional hike early in 2027.
Warsh was careful to leave his options open. Bloomberg’s Yvonne Man and David Ingles discussed the central bank’s outlook with Larry Hatheway, Head of Research and Global investment Strategist at the Franklin Templeton.
