"AppLovin lost nearly a fifth of its value and tumbled 19.7%, even though it reported a stronger profit for the latest quarter than analysts expected. Like other software companies, it's come under pressure from worries that AI may undercut its business while fundamentally changing how people use the internet. AppLovin CEO Adam Foroughi pushed back on the concerns, saying in a conference call with analysts that indicators show his company is doing well. "There's a real disconnect between market sentiment and the reality of our business," he said."
"Cisco Systems dropped 12.3% despite likewise topping analysts' expectations for profit and revenue last quarter. The tech giant indicated that it may make less profit off each $1 of revenue during the current quarter than it did in the past quarter. Analysts said that could be an indicator of higher prices for computer memory that everyone is having to pay amid the rush driven by AI. "The timing of AI disruption remains indeterminate, and the fog of uncertainty is unlikely to dissipate quickly," the strategists led by Matthew Mish wrote in a report."
The S&P 500 fell 1.6%, recording its second-worst day since Thanksgiving while still near its recent all-time high; the Dow dropped 669 points (1.3%) and the Nasdaq declined 2%. AppLovin plunged 19.7% despite reporting stronger-than-expected profit, as investor fears that AI could undercut software business models and change internet usage weighed on its stock; the CEO said business indicators remain strong and that market sentiment is disconnected from reality. Cisco slid 12.3% after signaling lower profit per dollar of revenue amid rising memory prices tied to AI demand. Strategists warn AI disruption risk is uncertain and could spill into bonds and defaults.
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