Shake-up for Google’s AI team as Wall Street awaits Middle East deal

Alphabet was among the megacap tech stocks weighing on Wall Street’s tech-heavy Nasdaq Composite after a shake-up of its artificial intelligence lab raised questions about the future of its research team, which has been struggling to keep pace with the likes of OpenAI and Anthropic.

Stocks on Wall Street and in Europe were mixed as investors wait for negotiations in the Middle East to reopen the Strait of Hormuz, as Iran said it had reached a deal with Oman on a proposed shipping route and US President Donald Trump said an agreement was imminent.

SpaceX slumped 12% after the space conglomerate marked its first quarterly earnings, highlighting its spending plans on AI infrastructure and naming Nvidia as its exclusive supplier.

And the NZX and ASX are set for a muted start to the trading day in the sedate tone across global markets, with AMP and ResMed among companies reporting across the Tasman, while New Zealand’s Commerce Commission is taking Foodstuffs South Island to court, accusing the grocery cooperative of anti-competitive conduct.

A plateau

Stocks on Wall Street were mixed as corporate earnings season continued at pace, with The Walt Disney Co one of the stronger performers as a box-office hit with Toy Story 5 and growth at its theme parks helped the media group beat expectations, while drugmaker Eli Lilly rallied as sales of its Zepbound and Mounjaro weight-loss and diabetes drugs surged during the second quarter, easily beating forecasts.

Meanwhile, Uber Technologies retreated as its revenue grew at a slower pace than expected, while Advanced Micro Devices tumbled despite its record sales, after SpaceX chief Elon Musk said his firm would exclusively use Nvidia chips.

Semiconductor firm Sandisk is among firms due to report after trading closes, and will be in the spotlight for the closely watched AI trade.

The Dow Jones Industrial Average rose 0.7% in late trading, with Nvidia leading the blue-chip index higher, while the S&P 500 was marginally higher and the Nasdaq dropped 0.6%.

Alphabet sank 4.3% after its chief scientist Jeff Dean departed with several staff to set up a Google-backed startup, with DeepMind chief Demis Hassabis moving into a chairman role of the AI division.

SpaceX dropped 12% to US$109.905 with US$101 billion of stock becoming available on Thursday in the US when the first tranche of locked-up shares is released. Local favourite Rocket Lab advanced 0.5% to US$74.87.

“Wall Street traded in mixed fashion overnight, with the S&P 500 hovering around record highs while the Dow Jones gained more than 400 points to another all-time high,” Moomoo market strategy consultant Greg Boland said in a note. “Beneath the surface, however, earnings season continued to create significant stock-specific moves.”

Still waiting

Brent crude oil futures slipped 0.2% to US$79.33 a barrel as investors continued to wait for a deal on reopening the Strait of Hormuz to be completed. Meanwhile, US crude oil stockpiles unexpectedly rose by 2.5 million barrels last week.

Across the Atlantic, stock markets were mixed in Europe, with the UK’s FTSE 100 up 0.1%, Germany’s DAX dipped 0.3% and France’s CAC 40 marginally higher.

Mining giant Glencore was among those pacing gains in London after beating expectations, and gold futures jumped 4.1% to US$4,322 an ounce.

Japan’s Honda Motor joined Toyota and Nissan in lifting June quarter profit, with the automaker benefiting from the weaker yen like its peers.

Australian futures are pointing to a marginally weaker start to the day for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar rose to 58.90 US cents at 7am in Auckland from 58.71 cents.

Moomoo’s Boland said a three-day rally for New Zealand’s S&P/NZX 50 index might take a breather when trading starts today after the mixed lead in the US and slightly weaker ASX futures.

“Local investors will continue watching global earnings, particularly SanDisk's results, alongside ongoing developments surrounding AI infrastructure spending, falling oil prices and expectations for future Reserve Bank policy following yesterday's softer New Zealand labour market data,” Boland said.

No major local data is due today, while Asset Plus will hold its annual meeting in Auckland today.

Across the Tasman, ResMed and AMP are among companies due to report.

Reporting by Paul McBeth. Image from Solen Feyissa on Unsplash.