Tech stocks led a retreat in US markets on Thursday as Meta’s revenue forecast spooked investors, setting the stage for a high-stakes earnings showdown for other megacap companies. The Nasdaq 100 futures dropped 1%, while S&P 500 and Dow Jones futures also slipped.
Meta, the parent company of Facebook and Instagram, saw its shares plummet over 12% after revealing plans to invest up to $10 billion in AI infrastructure. The market was concerned about the timeline for these investments to translate into revenue, dragging down the broader tech sector.
The disappointing performance from Meta has dampened hopes for a stock market comeback, especially as other tech giants like Microsoft and Alphabet are set to report earnings. Investors are eagerly awaiting updates on GDP, with expectations for a 2.5% growth rate in the first quarter.
The focus on GDP comes as the US economy continues to show strength, leading some to reconsider the possibility of Federal Reserve interest rate cuts. Any signs of inflationary pressures will only add to the debate, with the Fed’s preferred inflation gauge set to be released on Friday.
In the midst of this market turmoil, JP Morgan analyst Doug Anmuth highlighted concerns about Meta’s spending spree on AI initiatives. Meanwhile, Chipotle continues to impress with its growth story, and the trucking and railroad industries are facing challenges that could signal an economic slowdown.
IBM also faced a rough day, with shares tanking after earnings. The company’s CFO, Jim Kavanaugh, addressed concerns about the consulting business and highlighted the strategic importance of the HashiCorp deal for IBM’s transformation into a hybrid cloud and AI company.
Overall, the market is in flux as investors grapple with the implications of Meta’s revenue miss and await key economic data releases. The tech sector’s performance, along with updates on GDP and inflation, will likely shape market sentiment in the days ahead.
