Nasdaq 100 futures fall 1.2% after mixed results from Alphabet and Microsoft

Key Facts

Nasdaq 100 futures fell 1.2% to 29,619.50 points on Wednesday evening, at 19:39 Eastern time, after mixed results from Alphabet and Microsoft. Alphabet shares dropped more than 10% to $289.95 in extended trading after the third-quarter results were announced, while Microsoft shares rose nearly 3% after results topped expectations. The indexes ended Wednesday’s session with modest gains, with the Nasdaq Composite up 0.3%. In EL7 data, the Nasdaq 100 closed at 29,813.16 points on October 28. The mixed results came as investors focused on whether technology companies can turn AI investments into revenue and cash flows that justify the scale of spending.

Alphabet reported third-quarter revenue of $127.58 billion, up 25% year over year, but below the average analyst estimate of $127.97 billion, according to The Associated Press. The company posted net income of $26.17 billion for the July-to-September period, compared with $34.98 billion in the same period a year earlier. Earnings per share were $2.12, versus analyst estimates of about $3.01. The results showed that revenue growth did not prevent profits from falling below year-earlier levels, while revenue also came in below expectations. Alphabet Class A shares closed at $324.89 on October 28, according to EL7 data, before falling in extended trading after the results.

By contrast, Alphabet’s cloud business expanded rapidly, with Google Cloud revenue rising 103% to $30.7 billion from a year earlier. Chief Executive Sundar Pichai said infrastructure and AI solutions are "the main drivers of cloud growth." Pichai also announced that the Gemini app had reached one billion users, describing it as "Google’s fastest-growing product in its history." But investors focused on whether sales would justify the large investments in AI, according to The Associated Press. The results from technology giants shook markets that had been buoyed by high expectations amid global interest in AI, the agency reported.

Cash flow was one of the main sources of concern about Alphabet: the company recorded negative free cash flow of $9.07 billion in the third quarter, while analysts had expected it to be close to break-even. That exceeded the $5.9 billion cash outflow in the previous quarter, according to Reuters. Chief Financial Officer Anat Ashkenazi said AI-driven capital expenditures "will increase significantly in 2027." She added that the company’s capital expenditure outlook for the current year was unchanged. The results thus combined strong cloud business growth with cash pressure and guidance for a significant increase in future capital spending, factors that coincided with the share decline after the results were announced.

Microsoft posted stronger results for the quarter ended September 30, 2026, with revenue rising 19% to $92.3 billion and Azure revenue growing 48%. Microsoft Cloud revenue reached about $63.9 billion, up 30% year over year in the first quarter of fiscal 2027. The company’s chief financial officer said results exceeded expectations for revenue, operating income and earnings per share. Microsoft shares closed at $531.01 on October 28, according to EL7 data, then rose nearly 3% in extended trading after the results. That performance differed from the market reaction to Alphabet, although both companies face scrutiny over AI-related spending.

Markets are watching the outcome of the European Central Bank meeting on Thursday, October 29, while the Bank of Japan was expected to leave policy unchanged when its meeting concluded on Friday, October 30, according to The Associated Press. The two central banks’ decisions follow a U.S. session in which the Nasdaq Composite rose 0.3%, before Nasdaq 100 futures fell in the evening. Extended trading also showed opposing moves in Alphabet and Microsoft shares, with the former falling and the latter rising. Alphabet’s results combined 103% growth in Google Cloud revenue with negative free cash flow, while Microsoft reported growth in Azure and cloud revenue. These results keep the return on capital spending at the forefront of investors’ focus on the technology sector.