S&P 500 Futures Fall 0.4% as Alphabet Drops 11.5% Before the Open
Key Facts
S&P 500 futures fell 0.4% and Nasdaq 100 futures dropped 1.22% at 08:48 a.m. Eastern Time on Thursday, as technology company results weighed on trading. Alphabet shares fell 11.5% in premarket trading after the company’s results raised concerns about AI costs and accelerating cash burn as related spending increased, according to Reuters via Investing.com. The company was at risk of losing more than $450 billion in market value if the decline continued, the same source said. The share move came despite Alphabet’s revenue rising 25% year over year in the third quarter to $127.58 billion. Revenue nevertheless missed the analyst consensus estimate of $127.97 billion, according to a FactSet survey cited by the Associated Press. The results showed a divergence between cloud growth driven by AI demand and the performance of core advertising businesses.
Alphabet’s results also fell short of expectations on net income, which declined to $26.17 billion in the July-to-September period from $34.98 billion in the same period a year earlier. Earnings per share were $2.12, versus analyst estimates of about $3.01, according to the Associated Press. In advertising, revenue from Google Search and other ads rose 12% to $63.3 billion, while YouTube ad revenue increased 9% to $11.2 billion. The Associated Press reported that both gains were below some analysts’ expectations, showing that overall revenue growth did not dispel market disappointment with the performance of key segments. By contrast, Google Cloud revenue surged 103% year over year to $30.7 billion, recording the segment’s highest growth. Alphabet attributed cloud growth to infrastructure and AI solutions, while advertising businesses remained slower than some analysts had estimated.
Elsewhere in technology results, Microsoft said revenue reached $92.3 billion in the first quarter of its fiscal 2027, up 19% year over year. Net income under generally accepted accounting principles reached $36.6 billion, up 32%, while diluted earnings per share rose 32% to $4.92. The company’s chief financial officer said results exceeded expectations for revenue, operating income and earnings per share. Microsoft Cloud revenue was about $63.9 billion, up 30% year over year, while Azure revenue increased 48%. The figures highlight the strength of the company’s cloud computing growth alongside Alphabet’s results, although the market comparison focused on differences in the performance of Alphabet’s advertising and cloud businesses. Microsoft shares closed at $531.01 on October 28, according to EL7 data.
In semiconductors, Samsung Electronics reported record consolidated revenue of 195.3 trillion won in the third quarter of 2026, up 14% from the previous quarter, with operating profit of 107.4 trillion won. The company said its Device Solutions division posted revenue of 147.1 trillion won and operating profit of 106.5 trillion won. The division’s sales rose 15% quarter over quarter, while the memory business recorded its highest quarterly revenue and operating profit in its history. Samsung said demand for semiconductors was expected to remain strong. The company’s figures show that Device Solutions accounted for the largest share of the group’s reported revenue and operating profit in the quarter. Samsung linked memory performance to strong semiconductor demand as infrastructure needed for AI applications expands.
The company results followed the Federal Reserve’s decision on October 28 to keep its target interest rate range at 3.75% to 4%, in a 10-to-2 vote. The two dissenting members favored a quarter-point rate increase, according to the central bank’s statement. In economic data, the advance estimate showed U.S. real gross domestic product grew at an annual rate of 3.4% in the third quarter, after 2.2% in the second quarter, exceeding economists’ 3% forecast, according to FactSet. The Bureau of Economic Analysis attributed the increase to higher investment, consumer spending and government spending, partly offset by a decline in exports. Faster economic growth provides a backdrop for corporate results, particularly given the contribution of investment and consumer spending to output expansion. The second estimate of third-quarter GDP is scheduled for release on November 25, 2026, according to the Bureau of Economic Analysis.
The European Central Bank’s calendar had set October 29 for the release of monetary policy decisions at 14:15 Central European Time, followed by a press conference at 14:45. On spending, Alphabet’s chief financial officer said the company still expects capital expenditures to rise significantly in 2027. She added that the company would provide further details during its fourth-quarter earnings call. These expectations put capital spending at the center of investors’ focus on the company’s results, after Reuters linked pressure on the shares to concerns over AI costs. Google Cloud’s performance, with revenue up 103% to $30.7 billion, remains an indicator of the strong demand underpinning investment in infrastructure and AI-related solutions. The next data release the Bureau of Economic Analysis has scheduled to assess the U.S. economy’s trajectory is the second GDP estimate on November 25.