AI Stocks Fall After Alphabet Earnings Disappoint, U.S. Growth Tops Forecasts -- Update

Technology stocks slid across the globe after Alphabet earnings reignited worries about how companies can make money from artificial intelligence, even as U.S. growth data for the third quarter came in hotter than expected. Nasdaq futures fell 1.3% as investors honed in on a disappointing set of earnings from Google-parent Alphabet. Despite soaring sales in its cloud-computing business, the company's overall revenue missed Wall Street expectations. Weaker-than-anticipated search sales were behind the miss, with analysts worrying that Alphabet is yet to demonstrate that it can make money from its AI-powered search engine. Alphabet shares fell over 11% in premarket trade, dragging other AI-related stocks down with it. In Asia, South Korean chip maker Samsung Electronics reported a ninefold surge in operating profit, but its shares fell as investors reacted negatively to the company's outlook. The Korean Kospi closed lower, while U.S. chip makers fell back premarket. The results demonstrate that "leadership in the AI race depends not only on having the most exciting technology, but also on turning that technology into profitable growth without overwhelming the balance sheet," Swissquote analyst Ipek Ozkardeskaya said. Elsewhere in equity markets, futures for the S&P 500 fell 0.4%, while futures for the Dow Jones Industrial Average reversed earlier gains to fall 0.2%. In Europe, earnings reports drove market moves. The Stoxx 600 added 0.8%. Thursday provided a raft of closely watched macro data following the Federal Reserve's interest-rate decision Wednesday. The economic picture was made more complicated by European Central Bank President Christine Lagarde's announcement that she will step down from her position early. In the U.S., third-quarter GDP growth was 3.4%, compared with the 3.1% forecast by economists polled by The Wall Street Journal. The personal consumption expenditures price index--the Fed's favored inflation gauge--rose to 3.6% in September on an annualized basis, well ahead of the central bank's 2% target. Treasury yields retraced some losses following the data, with 10-year yields nudging back above 5%, while 30-year yields traded above 5.320%. Expectations for a December rate hike picked up slightly to 84% probability, according to LSEG. Lower oil prices helped ease pressure on Treasurys, with benchmark Brent crude contracts for December delivery falling around 0.9% to around $114.30 a barrel. Investors are looking to the possibility of a revival in peace talks after The Wall Street Journal reported that U.S. Vice President JD Vance sent a letter to Mohsen Rezaei, secretary of Iran's Supreme National Security Council. The dollar nudged higher against a basket of global currencies. Gold contracts were steady at just above $4,000 a troy ounce. Bitcoin fell back, dropping over 1% to trade around $80,150. For the day ahead, investors will digest a rate decision from the European Central Bank. Earnings prints come from Amazon, Intel and SanDisk after the bell, among others.

AI Stocks Fall After Alphabet Earnings Disappoint, U.S. Growth Tops Forecasts -- Update

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