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U.S. stocks opened mostly higher as investors digested a slew of corporate earnings reports, including some from the so-called Magnificent 7.
Magnificent 7 stocks are mega-cap technology companies whose shares have significant weighting in major stock indexes and have led much of the rally in stocks the past few years. They are Apple, Microsoft, Amazon, Alphabet (Google), Tesla, Meta (Facebook), and Nvidia.
Last evening, Tesla, Microsoft and Meta reported mixed results, but analysts were eager to hear what the companies had to say about artificial intelligence.
“Our primary question is whether these companies plan to continue to spend aggressively or will they seek lower cost alternatives due to the DeepSeek’s revelation?” said Mike O’Rourke, chief market strategist at JonesTrading.
AI-related stocks fell sharply on Monday after China’s DeepSeek said it built an AI model competitive with OpenAI and ChatGPT with less than $6 million, significantly less than what U.S. companies have been spending on AI.
Analysts were heartened to hear Meta and Microsoft both reiterated their spending plans. DeepSeek did not come up on Tesla’s earnings call.
However, shares of Nvidia, whose chips power AI and benefit from AI spending, dipped more than 2%. On Wednesday, Bloomberg reported that President Donald Trump’s administration discussed curbing the company’s chip sales to China.
At 10:15 AM ET, the broad S&P 500 index was up 0.31%, or 18.84 points, to 6,058.15; the blue-chip Dow rose 0.19%, or 83.73 points, to 44,797.25; and the tech-heavy Nasdaq gained 0.12%, or 23.93 points, to 19,656.25. The benchmark 10-year Treasury yield slipped to 4.508%.
Corporate news breakdown
With the Federal Reserve’s interest rate moves likely on pause for the foreseeable future, investors have moved on to corporate news for stock market direction. Some of the biggest movers include:
- Microsoft beat earnings estimates in its second fiscal quarter but its sales outlook for the current quarter missed. The software giant said its Azure cloud business struggled but its artificial intelligence business is doing $13 billion in annualized revenue. Shares of the Redmond, Washington company are down almost 5%.
- Tesla missed quarterly profit expectations, but Chief Executive Elon Musk said more affordable models of its cars are on track for this year and he expects its auto business to return to growth this year. Shares are down a fraction.
- Meta posted record quarterly revenue and beat earnings forecasts. Separately, Meta agreed to pay $25 million to settle a 2021 lawsuit Trump brought after his social-media accounts were suspended. Much of the money will go towards Trump’s presidential library. Shares are up more than 4%.
- UPS warned it will miss sales forecasts and that it will cut in half the volume it does for its top customer. It didn’t…
Read More: US stocks open higher as market digests earnings, AI spending plans
