S&P 500 Futures Fall 0.4% After Alphabet Declines Despite 25% Revenue Growth
Key Facts
S&P 500 futures fell 0.4% and Dow Jones futures rose 0.4% in early Thursday trading after technology companies’ results drew mixed responses to growth in their AI businesses. Alphabet shares fell about 10% in after-hours trading on Wednesday, while Microsoft shares rose nearly 3% after results topped expectations, according to the Associated Press. Alphabet revenue increased 25% year over year to $127.58 billion in the third quarter, but came in below the $127.97 billion average analyst estimate in a FactSet survey. By contrast, Microsoft reported growth in cloud and Azure revenue in its quarterly results. The after-hours moves reflected investors’ differing reactions to the two companies’ performance despite growth in their AI-related businesses.
Alphabet revenue fell short of the average forecast despite year-over-year growth, while its search and advertising businesses grew more slowly than some analysts had estimated. Google Search and other advertising revenue rose 12% to $63.3 billion, while YouTube advertising revenue increased 9% to $11.2 billion, according to the Associated Press. The agency said both increases were below some analysts’ expectations. The results highlight the differing performance of the company’s core advertising businesses and cloud infrastructure operations. Alphabet shares closed at $324.89 on October 28, before the decline in after-hours trading.
Microsoft reported cloud revenue of $63.9 billion in the first quarter of its fiscal 2027, up 30% year over year, according to a company statement. Azure revenue rose 48% year over year in the same quarter. The company’s net income was $36.6 billion, while diluted earnings per share reached $4.92, up 32% under generally accepted accounting principles. Microsoft shares rose nearly 3% in after-hours trading on Wednesday after the company reported better-than-expected results, according to the Associated Press. The stock closed at $531.01 on October 28.
In South Korea, Samsung Electronics shares fell 4.1% in early Thursday trading despite the company reporting strong quarterly results, according to the Associated Press. Consolidated revenue was 195.3 trillion won, up 14% from the previous quarter, while operating profit reached 107.4 trillion won in the third quarter. The company attributed growth in Device Solutions revenue and profit to strong semiconductor demand and said demand for AI chips is increasing. The division reported revenue of 147.1 trillion won and operating profit of 106.5 trillion won. The Associated Press reported that some investors’ disappointment with shareholder-return arrangements came amid the share decline; this explanation is attributed to the agency.
Attention turns from company results to economic activity data and central bank meetings. The advance estimate of U.S. gross domestic product for the third quarter was scheduled for release on Thursday, October 29, at 8:30 a.m. Eastern Time; the second estimate is due November 25 and the third on December 23. The Federal Reserve kept its target interest rate range at 3.75% to 4% in its October 28 decision, with two members voting to raise rates while the majority supported holding them steady. The European Central Bank’s monetary policy decisions were scheduled for release at 14:15 Central European Time on Thursday, followed by a press conference at 14:45. On capital spending, Alphabet said it still expects a significant increase in expenditures in 2027, with further details to come on its fourth-quarter results call; Samsung also expects continued investment in AI infrastructure in the fourth quarter of 2026 and for its investment to reach a record level in 2027.