Nasdaq-100 futures fell about 1% in premarket trading on Thursday, October 29, after Alphabet reported weaker-than-expected third-quarter results, while Microsoft shares rose on a stronger earnings report. The split verdict put the cost of artificial intelligence investment — and how quickly it turns into cash — at the centre of the market’s reaction.
Alphabet, Google’s parent company, fell about 10% in premarket trading in early snapshots, while Microsoft rose about 3–4%. The moves were premarket indications, not final closing results, and the exact percentages varied slightly between data providers and snapshots during the morning.
Alphabet misses expectations as cash flow turns negative
Alphabet reported third-quarter revenue of $127.6 billion, up 25% from a year earlier but below the $128.22 billion consensus estimate. Earnings per share came in at $2.12, below expectations, after an $8.66 billion loss on equity securities weighed on net income.
Google Cloud revenue jumped 103% to $30.7 billion, beating expectations. But search and other revenue of $63.4 billion missed estimates, and investors focused on cash generation: Alphabet reported negative free cash flow of $9.07 billion, its second straight negative quarter, after capital expenditure of $51.4 billion in the quarter.
Alphabet maintained its full-year capital expenditure forecast at $195 billion to $205 billion. Management said spending would rise significantly in 2027, a signal that the AI building programme is not slowing even as investors scrutinise the returns.
Microsoft rises on Azure-led beat
Microsoft offered the contrasting picture. Revenue rose 19% to $92.28 billion in its fiscal first quarter, beating expectations, with adjusted earnings of $4.89 per share, also above forecasts.
Azure cloud revenue grew 48% to $33.17 billion, accelerating from 42% in the previous quarter, in Microsoft’s first dollar disclosure of Azure revenue. Unlike Alphabet, Microsoft remained strongly cash-flow positive, which analysts cited as a key reason for the different market reaction.
Broader market steadier outside tech
The pressure was concentrated in technology shares. In CNBC’s early Thursday update, S&P 500 futures slipped 0.39% while Dow Jones futures advanced 0.38%, even as Nasdaq-100 futures fell 1.21%. Software shares were also under pressure: Fortinet tumbled about 25% and ServiceNow dropped about 19% after their own results.
The moves came a day after the US Federal Reserve left interest rates unchanged, and ahead of a key inflation reading. In Asia, shares had already given up earlier gains as Alphabet’s after-hours fall weighed on sentiment, with Samsung shares sliding more than 4% despite a record third-quarter operating profit.
What to watch next
Attention now turns to Amazon and Intel, both due to report after Thursday’s close. Their results — and how they frame AI spending and returns — will test whether the market’s tougher stance on AI cash burn extends beyond Alphabet or remains specific to its quarter.
Investors are no longer giving every large technology company a free pass to spend without limit, one fund manager told Reuters, as monetisation timelines come under closer scrutiny. For now, the market is drawing a sharper line between AI spending that already generates cash and spending that has yet to pay for itself.
Frequently asked questions
Why did Alphabet shares fall? Alphabet missed revenue and earnings expectations, reported negative free cash flow of $9.07 billion, and kept a very large capital spending plan, raising questions about the pace at which AI investment converts into profit.
Why did Microsoft shares rise? Microsoft beat revenue and earnings expectations, Azure growth accelerated to 48%, and the company remained cash-flow positive despite its own rising investment.
Are premarket moves final? No. Premarket prices are indications before the regular session opens and can change materially once trading begins.
Sources
- Reuters via Devdiscourse, “US STOCKS-Nasdaq futures fall 1% as Alphabet results intensify AI spending fears”, October 29, 2026 — https://www.devdiscourse.com/article/international/3998812-us-stocks-nasdaq-futures-fall-1-as-alphabet-results-intensify-ai-spending-fears?amp
- Reuters, “Nasdaq futures slide as mixed Big Tech results test AI trade”, October 29, 2026 — https://yall1067.com/2026/10/29/nasdaq-futures-slide-as-mixed-big-tech-results-test-ai-trade/
- CNBC via Suaragarut, “Alphabet Earnings Send Nasdaq Futures Lower on October 29”, October 29, 2026 — https://suaragarut.id/en/alphabet-earnings-nasdaq-futures-october-29
- Securities.io, “Alphabet Q3 Revenue Rises 25% as Google Cloud Revenue Jumps 103%”, October 28, 2026 — https://www.securities.io/alphabet-q3-revenue-rises-25-as-google-cloud-revenue-jumps-103/
- Gulf News, “Alphabet’s AI Spending Hits Hard as Microsoft Shines with Positive Growth”, October 29, 2026 — https://gulfnews.com/business/same-ai-race-alphabet-burns-cash-while-microsoft-keeps-it-positive-1.500727955
Related on Emadan: Samsung’s record third-quarter profit, the Federal Reserve’s latest decision, and US stocks on October 27.
