US STOCKS-S&P 500, Nasdaq fall as earnings season gathers speed; Alphabet the biggest drag

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Updates with afternoon prices

By Shashwat Chauhan and Sukriti Gupta

Feb 5 (Reuters) - The S&P 500 and the Nasdaq slipped on Wednesday, with Alphabet the biggest drag after the tech giant's dour cloud revenue and hefty investments into artificial intelligence disappointed investors, while a slew of earnings added to the volatility.

Google-parent Alphabet GOOGL.O dropped 8.2% after posting downbeat cloud revenue growth and earmarking a higher-than-expected $75 billion for its AI buildout this year.

"The market has some evidence to suggest that there are other companies that possibly doing it cheaper, better, faster, quicker," said Dave Grecsek, managing director in planning strategy and research at Aspiriant.

"So what is the wisdom of continuing to maintain high capex?"

AI-related stocks were rocked last week following the soaring popularity of a low-cost Chinese artificial intelligence model developed by startup DeepSeek . Nvidia NVDA.O, one of the companies that was the worst hit, was up 3.8% on the day.

Advanced Micro Devices AMD.O, meanwhile, lost 8.9% after CEO Lisa Su said the company's current-quarter data center sales - a proxy for its AI revenue - would fall about 7% from the previous quarter.

On the data front, U.S. services sector activity unexpectedly slowed in January amid cooling demand, helping curb price growth, a reading from the Institute for Supply Management showed.

Private payrolls rose by 183,000 jobs last month, compared with an estimated 150,000 increase, per economists polled by Reuters.

The all-important January nonfarm payrolls report is expected to be released on Friday.

Shares of Apple AAPL.O eased 1.2% as Bloomberg News reported that China's antitrust regulator was preparing for a possible investigation of the iPhone maker.

At 11:33 a.m. ET, the Dow Jones Industrial Average .DJI rose 65.83 points, or 0.15%, to 44,621.87, the S&P 500 .SPX lost 4.37 points, or 0.08%, to 6,033.51 and the Nasdaq Composite .IXIC lost 70.17 points, or 0.34%, to 19,586.61.

Eight of the 11 S&P 500 sectors traded higher, though communication services' .SPLRCL over 3% fall obscured gains.

Uber Technologies UBER.N dropped 7.2% after the ride-hailing company forecast current-quarter bookings below estimates.

Fiserv FI.N advanced 7.1% as the payments firm beat estimates for fourth-quarter profit, helped by strong demand in its banking and payments processing unit.

Markets also looked for developments on the tariffs front after U.S. President Donald Trump said on Tuesday he was in no hurry to speak to Chinese President Xi Jinping to try to defuse a new trade war between the countries.

Richmond Fed president Thomas Barkin said the Fed was still leaning towards more rate cuts this year, but flagged uncertainty around the impact of new tariffs, immigration, regulations and other Trump administration initiatives.

Among top movers, FMC Corp FMC.N plunged 33.6% after the agrichemicals producer forecast first-quarter revenue below estimates.

Johnson Controls JCI.N jumped 11.1% as the building solutions company named Joakim Weidemanis as chief executive officer and lifted its 2025 profit forecast.

Advancing issues outnumbered decliners by a 2.03-to-1 ratio on the NYSE and by a 1.6-to-1 ratio on the Nasdaq.

The S&P 500 posted 27 new 52-week highs and 12 new lows, while the Nasdaq Composite recorded 81 new highs and 69 new lows.