US stocks opened lower on Thursday, 29 October, as Alphabet’s quarterly results reignited worries about soaring artificial-intelligence spending, dragging the Nasdaq down and pulling the wider market with it. Investors were also assessing fresh inflation data after the Federal Reserve kept interest rates unchanged.
At the open, the Dow Jones Industrial Average fell 389 points, or 0.74%, to 52,086.13. The S&P 500 declined 0.57% to 7,699.61, and the Nasdaq Composite dropped 1.31% to 26,201.823, according to the Economic Times live market blog.
Alphabet was the trigger. Shares of the Google parent plunged as much as 13% in morning trading, on track for their steepest one-day fall on record, after the company reported disappointing search advertising results and a surge in cash burn as AI-related spending accelerated. Reuters reported the Google parent was on track to lose more than $500 billion in market value, accounting for most of the more than $693 billion the Nasdaq-100 was set to erase if the losses held.
The numbers behind the sell-off explain the alarm. Alphabet reported negative free cash flow of $9.07 billion, while keeping a huge AI capital-expenditure guide of $195 billion to $205 billion. For investors, that combination — heavy spending now, with returns still to prove themselves — is exactly the fear that has tempered enthusiasm for the AI trade this month, as debt-fuelled spending looks harder to justify while borrowing costs climb.
“The positive AI effects must stay intact for years to come, or investors in Alphabet (and other hyperscalers) will eventually re-rate the multiples as the bottom-line profits fade,” said Anders Bylund, tech analyst at The Motley Fool, as quoted by Reuters.
The sell-off spread well beyond Alphabet. The Philadelphia Semiconductor index was down 1.8% after four straight sessions of gains. Software stocks fell sharply: cybersecurity firm Fortinet slipped 21.7% after reporting third-quarter results, while ServiceNow dropped 23.3% after missing third-quarter profit estimates. As the session developed, the Nasdaq’s fall deepened to 1.83% in one intraday reading, with Alphabet down 13.3%.
Microsoft, by contrast, edged only 0.5% lower. The company had delivered a big cash-flow beat on Wednesday and forecast strong cloud growth, though media reports that it is planning to raise at least $25 billion through its first US investment-grade bond sale in more than nine years weighed on its shares. Related on Emadan: Premarket session.
The market backdrop added to the tension. The Fed’s decision to hold rates unchanged left investors parsing fresh inflation data for clues about the next move, on the same day the US reported third-quarter GDP growth of 3.4% and September PCE inflation of 3.6% from a year earlier. Those figures frame the central question for markets: growth is holding up, but inflation has not gone away, and the AI spending boom is being funded at a cost. Related on Emadan: US Q3 GDP and PCE inflation and Caterpillar falls despite Q3 beat.
What to watch from here is whether Alphabet’s drop stabilises or deepens, and whether the AI-spending debate spreads further into software and chip stocks that have ridden the same trade. A single morning’s trading does not settle that question — but a 13% fall in one of the world’s largest companies, on the day after the Fed stood pat, is a clear warning that investors are now demanding proof that AI spending pays.
FAQ
Q: How far did Alphabet fall? A: As much as 13% in morning trading, on track for its steepest one-day fall on record.
Q: How did the main indexes open? A: Dow -0.74% to 52,086.13, S&P 500 -0.57% to 7,699.61, Nasdaq -1.31% to 26,201.823.
Q: Why did stocks fall? A: Alphabet’s disappointing search-ad results and surging AI cash burn revived fears that AI spending is outrunning returns, against a Fed-on-hold and fresh inflation backdrop.
Sources
- Reuters (via 93-5 The Lloyd): https://935thelloyd.com/2026/10/29/nasdaq-futures-slide-as-mixed-big-tech-results-test-ai-trade/
- Economic Times live blog: https://m.economictimes.com/markets/us-stocks/wall-street-guide/stock-market-live-updates-dow-jones-nasdaq-sp-500-alphabet-microsoft-nvidia-intel-amazon-fortinet-servicenow-earnings-alphabet-google-ai-spending-fears-fed-rate-decision-pce-inflation-gdp-data-treasury-yield-news-29th-october-2026/amp_liveblog/135310262.cms
- Invezz: https://invezz.com/news/2026/10/29/nasdaq-falls-1-83-as-alphabet-sell-off-revives-fears-over-ai-spending-costs/
