Alphabet Falls 10% Premarket; Nasdaq Futures Slide
Alphabet shares are trading about 10% lower in premarket. After Wednesday's close, the company reported $51.4B of third-quarter capital spending. Operating cash flow of $42.3B did not cover it, leaving free cash flow at minus $9.1B.
Revenue rose 25% to $127.6B, and Google Cloud revenue jumped 103% to $30.7B. But search revenue growth slowed to 12%, from 19% in the first quarter. EPS came in at $2.12 against expectations of $3.11; an $8.7B equity-securities loss cut 55 cents from earnings.
Microsoft priced the other way the same evening. Revenue of $92.3B beat the expected $90.7B, Azure grew 48%, and guidance calls for 49-50% growth this quarter. Capex of $45.2B came in below estimates, free cash flow was a positive $18.6B, and the stock rose 3-4% after hours.
The market read both reports as cash stories, not AI stories. Selling is concentrated in tech: Nasdaq 100 futures are down about 1%, while Dow futures are slightly higher.
The Fed held its policy rate at 3.75-4.00% on Wednesday. The vote was 10-2; Governor Lisa Cook and Cleveland Fed President Beth Hammack wanted a 25 basis point hike. The statement dropped September's line that the hike would support a timelier return to target, saying more information will set the stance.
