Alphabet shares slide before the opening bell as AI spending worries return, while Microsoft rises

NEW YORK (Oct. 29) — Shares of Google parent Alphabet fell sharply in premarket trading Thursday after its third-quarter results renewed investor worries about the cost of artificial intelligence, while Microsoft shares rose after it beat expectations.

Alphabet was down 10.2% before the opening bell, putting it on track to lose more than $400 billion in market value if the losses held, Reuters reported. The company reported disappointing search advertising results and a jump in cash spending as AI-related investment accelerated, Reuters said. Alphabet's sales fell short of analyst expectations even as its cloud business grew 103%, and concerns centered on free cash flow and the return on its AI spending, Yahoo Finance reported.

Microsoft climbed 3.6% in premarket trading after reporting a large cash-flow beat and forecasting strong cloud growth, according to Reuters. Yahoo Finance said Microsoft beat analyst expectations for both revenue and earnings.

The split weighed on technology-heavy indexes. As of about 7 a.m. ET, Nasdaq-100 futures were down 1.3% and S&P 500 futures were down 0.4%, while Dow futures were up 0.3%, Yahoo Finance reported. Chip stocks including Nvidia, AMD and Intel were also lower before the open, Reuters said.

Investors are also awaiting the government's September Personal Consumption Expenditures inflation report and its first estimate of third-quarter economic growth, both due Thursday morning, a day after the Federal Reserve left interest rates unchanged. Amazon and Intel are scheduled to report results after the market closes Thursday.