Microsoft shares drop, chipmakers surge following AMD report

Microsoft shares fell 2% before the bell on Wednesday due to a slowdown in growth within its cloud business. In contrast, Nvidia and other chipmakers saw gains following a positive quarterly report from Advanced Micro Devices (AMD).

The gains in chipmakers and losses in their biggest customers underscored a divide in the AI landscape, with investors questioning if Wall Street's AI rally may have become overextended.

Microsoft is on track to shed more than $70 billion in its market capitalization, if losses hold.

In its report after the bell, Microsoft said revenue from its Intelligent Cloud unit - home to the Azure cloud-computing platform - jumped 19% to $28.5 billion, but missed analysts' estimates of $28.7 billion.

Big Tech companies - Meta Platforms, Amazon, Apple, Alphabet and Tesla were marginally up in premarket trading, after having fallen on Tuesday following Microsoft's results.

The growing cost of the AI race added to investor fears after Alphabet last week reported a bigger-than-expected rise in capital expenditure to support its generative AI technology.

Technology companies have faced high expectations going into this earnings season. Analysts on average see technology companies in the S&P 500 growing their aggregated earnings by almost 10%, according to LSEG data.

Shares of Nvidia, whose processors are the gold standard in AI computing, rose 5.6%. Broadcom, which also sells AI-related chips advanced 4.4%. Intel added 1.86% and Qualcomm rose 3.5%.

News.Az