📄 Full report · Morning · 10 min · 3-minute summary available
Alphabet Sinks 10% Before the Bell as Wall Street Splits Its AI Verdict From Microsoft
Data as of: 2026-10-29 07:02 ET (futures and premarket per Reuters; Asia closes and oil per AP 5:51 AM ET)
Key takeaways
- Alphabet fell 10.4% premarket after missing revenue and ad estimates while free cash flow turned negative again.
- Microsoft rose 2.1% on an Azure beat and a stronger revenue guide; Nasdaq 100 futures slipped 0.93%.
- Next: Q3 GDP (Reuters poll 3.2%) and PCE at 8:30 AM, the ECB at 9:15 AM, Amazon and Intel after the close.
☰ Contents
Two of the biggest AI spenders reported on the same night, and the market has picked a winner and a loser before the opening bell.
Alphabet fell 10.4% in premarket trading after revenue and advertising came in below estimates and free cash flow was negative for a second straight quarter. Microsoft rose 2.1% after Azure beat forecasts and it guided December-quarter revenue above Wall Street’s number.
Because Alphabet is one of the largest weights in the Nasdaq 100, those futures slipped 0.93% while Dow futures were nearly flat. At 8:30 AM the third-quarter GDP and September PCE inflation reports add a second test: a hot reading would feed the more-than-81% odds of a December Fed hike, on top of the AI-spending doubts.
What matters today
Investors are now paying for AI returns, not AI spending
Alphabet’s third-quarter revenue of $127.6 billion missed the $128.2 billion LSEG estimate, and advertising of $82 billion trailed the $83.4 billion forecast as search growth slowed (Reuters). Google Cloud more than doubled to $30.7 billion with a $561 billion backlog, but capital spending of $51.4 billion pushed free cash flow to minus $9.1 billion (company release). The company kept its 2026 capex plan at $195 billion to $205 billion and said 2027 spending will rise significantly, and its finance chief warned of near-term margin pressure (Reuters).
Microsoft spent heavily too, but showed what it is getting for it. Adjusted EPS of $4.89 beat the $4.73 estimate, free cash flow of $18.6 billion was about $10 billion above expectations, and the December-quarter revenue guide of $96.0 billion to $97.1 billion topped LSEG’s $95.6 billion (Reuters). Satya Nadella told analysts the “shiny-object stuff is waning” as customers plan AI spending over a decade.
Why it matters: the split shows that investors no longer reward capex on its own; they want it matched by contracted revenue or cash flow. WMR data: Alphabet closed Wednesday at $324.89, already 19.3% below its three-month high and under its 20-day average; Microsoft was 1.9% below its high and above its 20-day average. See Alphabet and Microsoft.
Software takes the hit from slowing bookings
ServiceNow fell 19.6% premarket even though subscription revenue grew 21% to $3.99 billion and non-GAAP EPS was $1.00. The weak spot is the outlook: it guided current remaining performance obligations, contracted revenue due within a year, to grow 18.5% in the fourth quarter after 20.5% in the third (company release). Reuters said profit missed estimates and that Zscaler and Salesforce slipped in sympathy. Fortinet fell 26.2% after its own results.
Why it matters: software has been the group investors fear AI could disrupt, and a slowdown in bookings at a leader feeds that worry. Watch whether selling spreads from these two names to the wider software group at the open.
Industrials and drugmakers report a strong morning, with different reactions
Caterpillar’s sales rose 17% to $20.7 billion and adjusted EPS jumped to $7.20 from $4.95, with Power & Energy sales up 18% on data-center demand (company release). Yet the stock fell 9.7% premarket (Reuters), a sign that a big run-up had set a high bar.
Eli Lilly gained 3.9% after revenue rose 39% to $24.4 billion and it raised its full-year revenue outlook to $91 billion to $92 billion (company release). Merck rose almost 3% after revenue of $18.1 billion and adjusted EPS of $2.49 beat LSEG estimates of $17.3 billion and $2.08 (Reuters).
Before the Bell
| Futures (Reuters, 7:02 AM ET) | Change |
|---|---|
| S&P 500 E-minis | -0.2% |
| Nasdaq 100 E-minis | -0.93% |
| Dow E-minis | -0.09% |
| Premarket mover | Move | Why |
|---|---|---|
| Fortinet (FTNT) | -26.2% | Fell after Q3 results |
| ServiceNow (NOW) | -19.6% | Profit missed; slower Q4 cRPO guide |
| Alphabet (GOOGL) | -10.4% | Revenue and ads missed; cash burn widened |
| Caterpillar (CAT) | -9.7% | Q3 sales +17%, adj. EPS $7.20 |
| Carvana (CVNA) | +7.5% | Q3 revenue beat estimates |
| Chipotle (CMG) | +7% | Comparable sales beat expectations |
| Eli Lilly (LLY) | +3.9% | Revenue +39%; full-year revenue outlook raised |
| Microsoft (MSFT) | +2.1% | Azure beat; revenue guide above estimates |
Moves as reported by Reuters at 7:02 AM ET. Chips were weaker: Intel fell 3.7%, Micron 3.3% and AMD 2.8% in earlier premarket trading (Reuters). Before the open, the 10-year Treasury yield was about 5.00%, Brent crude $110.77 (-0.8%) and WTI $101.67 (-1.1%) (AP, 5:51 AM ET).
Last call vs. what happened
| What we flagged last evening | What happened | Market reaction |
|---|---|---|
| Microsoft’s call guidance | December-quarter revenue guide $96.0B-97.1B vs. $95.6B expected; Azure growth guide 49%-50% vs. 47.6% (Reuters) | MSFT +2.1% premarket |
| Microsoft vs. Alphabet after the close | Microsoft beat on Azure and cash flow; Alphabet missed on revenue and ads | GOOGL -10.4% premarket; Nasdaq 100 futures -0.93% |
| Q3 GDP and PCE at 8:30 AM | Not yet confirmed as this edition went out | Scored in the evening report |
Our three open calls for today (Q3 GDP at least 2.5%, the ECB holding at 2.50%, Microsoft closing above $531.01) are scored on the track record once results are in.
What to watch
| Time (ET) | Event |
|---|---|
| 8:30 AM | Q3 GDP, advance (Reuters poll 3.2%, Q2 2.2%); September personal income, spending and PCE prices |
| 8:30 AM | Weekly jobless claims |
| 9:15 AM | ECB decision; 70 of 73 economists in a Reuters poll expected a hold at 2.50% |
| After the close | Amazon (call 5:00 PM) and Intel |
| Fri 8:30 AM | Q3 employment cost index (BLS); Bank of Japan decision expected to hold (AP) |
- If GDP comes in well above the 3.2% poll and PCE prices run hot → check: the 2-year yield and December hike odds, now above 81%
- If Alphabet’s selling spreads to other AI spenders → check: Amazon and Meta at the open, and whether Microsoft holds its gain
- If Amazon’s AWS growth speeds up while capex climbs → check: whether investors treat it like Microsoft or like Alphabet after hours
Not a forecast — what to check depending on the outcome.
Our calls for today (logged on the track record before the results): the Nasdaq Composite closes below Wednesday’s 26,549.85; ServiceNow closes down more than 5% from Wednesday; Eli Lilly closes above Wednesday’s close.
Market data
Wednesday’s close (10/28)
| Index | Close | Day |
|---|---|---|
| S&P 500 | 7,743.98 | +0.3% |
| Dow Jones Industrial Average | 52,475.10 | +0.2% |
| Nasdaq Composite | 26,549.85 | +0.3% |
| Russell 2000 | 2,830.51 | +0.4% |
Closes from AP. Eight of 11 S&P 500 sectors rose; tech led with a 0.5% gain and real estate lagged with a 0.7% drop (Reuters).
U.S. markets at a glance — last 12 monthsComputed from raw prices · U.S. close of 2026-10-28S&P 5001Y +12.6%7,744 · 1W -0.2%Nasdaq1Y +12.3%26,550 · 1W -0.6%Dow1Y +10.4%52,475 · 1W -0.7%PHLX Semis1Y +63.0%11,684 · 1W +1.6%VIX1Y -0.5%16.83 · 1W +0.9%US 10Y1Y +1.05p5.045% · 1W -0.101pDollar Idx1Y +3.4%102.11 · 1W +0.3%Gold1Y +1.6%4,086 · 1W -1.6%WTI Crude1Y +65.4%101.38 · 1W +4.3%Tap for details
| Name | Last | 1D | 1W | 1M | 6M | 1Y |
|---|---|---|---|---|---|---|
| S&P 500 | 7,744 | +0.3% | -0.2% | +0.9% | +8.5% | +12.6% |
| Nasdaq | 26,550 | +0.3% | -0.6% | -0.9% | +7.6% | +12.3% |
| Dow | 52,475 | +0.2% | -0.7% | +2.2% | +7.4% | +10.4% |
| PHLX Semis | 11,684 | +1.8% | +1.6% | -7.5% | +13.8% | +63.0% |
| VIX | 16.83 | -3.9% | +0.9% | +4.9% | -0.9% | -0.5% |
| US 10Y | 5.045% | +0.052p | -0.101p | -0.210p | +0.627p | +1.048p |
| Dollar Idx | 102.11 | -0.2% | +0.3% | +0.7% | +3.2% | +3.4% |
| Gold | 4,086 | +0.3% | -1.6% | -2.2% | -10.4% | +1.6% |
| WTI Crude | 101.38 | +1.5% | +4.3% | +13.4% | -5.2% | +65.4% |
U.S. sector ETFs 1D performanceComputed from raw prices · U.S. close of 2026-10-28Tap for details
| Name | Last | 1D | 1W | 1M | 6M | 1Y |
|---|---|---|---|---|---|---|
| Tech (XLK) | 191.18 | +0.9% | +1.4% | -1.7% | +20.2% | +27.9% |
| Comm. (XLC) | 103.14 | -0.4% | -5.3% | -7.5% | -10.5% | -12.0% |
| Cons. Disc. (XLY) | 115.32 | -0.1% | -0.2% | +5.7% | -1.3% | -4.3% |
| Financials (XLF) | 56.13 | +0.5% | +0.2% | +3.9% | +8.1% | +5.2% |
| Health Care (XLV) | 179.76 | +0.3% | +0.5% | +5.3% | +25.9% | +22.8% |
| Energy (XLE) | 68.48 | +0.4% | +0.5% | +11.3% | +16.0% | +55.1% |
| Industrials (XLI) | 168.51 | +0.3% | +0.1% | -0.4% | -0.8% | +8.2% |
| Materials (XLB) | 51.87 | +0.2% | +1.1% | +5.6% | +1.8% | +16.6% |
| Utilities (XLU) | 42.49 | -0.8% | +1.2% | +7.0% | -7.0% | -7.3% |
| Cons. Staples (XLP) | 86.84 | -0.4% | -0.3% | +6.1% | +4.7% | +9.6% |
| Real Estate (XLRE) | 42.12 | -0.7% | +0.1% | +1.9% | -3.5% | -1.4% |
Big Tech closes and premarket
| Stock | Close (10/28) | Day | Premarket |
|---|---|---|---|
| Microsoft (MSFT) | $531.01 | -0.06% | +2.1% |
| Alphabet (GOOGL) | $324.89 | +1.34% | -10.4% |
| Amazon (AMZN) | $254.60 | +0.59% | Reports after today’s close |
| Nvidia (NVDA) | $215.38 | -1.17% | -0.7% |
| Meta (META) | $612.49 | -1.24% | Reported Oct 21 |
| Micron (MU) | $983.23 | +5.86% | -3.3% |
Closing prices from the Reuters market-data panel; premarket moves from Reuters. WMR data: Intel enters its report 31.6% below its three-month high and under its 20-day average; Amazon sits 8.4% below its high, right at its 20-day average.
Big Tech 1D performanceComputed from raw prices · U.S. close of 2026-10-28Tap for details
| Name | Close | 1D | 1W | 1M | 6M | 1Y | YTD | vs 1Y high | Volume vs 20D avg |
|---|---|---|---|---|---|---|---|---|---|
| Nvidia (NVDA) | $215.38 | -1.2% | -3.0% | -5.9% | +3.2% | +7.4% | +15.8% | -10.0% | 0.9x |
| Tesla (TSLA) | $404.22 | -0.8% | +4.6% | +13.1% | +8.4% | -12.2% | -10.1% | -17.5% | 0.9x |
| Alphabet (GOOGL) | $324.89 | +1.3% | -2.9% | -5.2% | -7.0% | +21.8% | +4.0% | -19.2% | 1.9x |
| Apple (AAPL) | $343.83 | -0.9% | -0.0% | +1.6% | +27.5% | +28.3% | +26.8% | -1.3% | 0.9x |
| Microsoft (MSFT) | $531.01 | -0.1% | -0.4% | +4.3% | +25.6% | -1.2% | +10.5% | -2.3% | 1.2x |
| Amazon (AMZN) | $254.60 | +0.6% | -3.0% | +3.4% | -3.2% | +11.1% | +10.3% | -10.4% | 0.9x |
| Meta (META) | $612.49 | -1.2% | -12.2% | -14.4% | -8.3% | -18.2% | -7.0% | -21.2% | 1.6x |
| Broadcom (AVGO) | $351.81 | +2.8% | +4.1% | +0.6% | -12.9% | -5.0% | +2.2% | -26.7% | 1.0x |
| Palantir (PLTR) | $196.81 | -1.0% | -2.4% | +5.0% | +42.6% | +3.8% | +10.7% | -5.9% | 0.9x |
| Nasdaq-100 ETF (QQQ) | $725.61 | +0.6% | +0.1% | -1.5% | +9.9% | +15.2% | +18.5% | -4.5% | 0.7x |
Earnings recap
| Company | Results | Outlook | Stock |
|---|---|---|---|
| Microsoft FQ1 | Revenue $92.3B (+19%); adj. EPS $4.89 vs. $4.73 est.; Azure $33.17B (+48%) | FQ2 revenue $96.0B-97.1B; Azure +49%-50% | +2.1% premarket |
| Alphabet Q3 | Revenue $127.6B vs. $128.2B est.; GAAP EPS $2.12; Cloud $30.7B | 2026 capex $195B-205B; 2027 “significant increase” | -10.4% premarket |
| ServiceNow Q3 | Subscription revenue $3.99B (+21%); non-GAAP EPS $1.00 | Q4 subscription revenue $4.245B-4.255B; cRPO +18.5% | -19.6% premarket |
| Ford Q3 | Revenue $49.5B (-2%); adj. EPS $0.49; adj. EBIT $2.7B | 2026 adj. EBIT $10.5B-11B, low end raised | Regular-session reaction in the evening report |
| Caterpillar Q3 | Revenue $20.7B (+17%); adj. EPS $7.20 | Record backlog cited | -9.7% premarket |
| Eli Lilly Q3 | Revenue $24.4B (+39%); non-GAAP EPS $7.48 | 2026 revenue $91B-92B, raised | +3.9% premarket |
| Merck Q3 | Revenue $18.1B vs. $17.3B est.; adj. EPS $2.49 vs. $2.08 | Full-year outlook raised | Almost +3% premarket |
Results from company releases and SEC filings; estimates as cited by Reuters (LSEG, Visible Alpha). Lilly’s non-GAAP EPS includes a $4.57-a-share acquired research charge. Shell reported adjusted earnings of $10.8 billion and a new $5 billion buyback (company release).
Biggest U.S. movers (market cap $5B+)Computed from raw prices · U.S. close of 2026-10-28Tap for details
| Name | 1D | Close | Mkt cap | Volume vs 20D avg |
|---|---|---|---|---|
| GMAB · Genmab A/S | +28.3% | $57.29 | $35.2B | 8.7x |
| ICLR · ICON plc | +17.0% | $214.16 | $16.5B | 4.6x |
| VRT · Vertiv Holdings, LLC | +16.5% | $242.94 | $93.5B | 3.4x |
| BLCO · Bausch + Lomb Corporation | +15.8% | $20.40 | $7.3B | 9.3x |
| SKHY · SK hynix Inc. | +13.3% | $164.70 | $1,161B | 2.2x |
| EVR · Evercore Inc. | +12.5% | $292.38 | $11.2B | 2.0x |
| FFIV · F5, Inc. | -20.4% | $365.53 | $20.7B | 6.2x |
| LPLA · LPL Financial Holdings Inc. | -15.2% | $269.19 | $21.2B | 7.1x |
| CSGP · CoStar Group, Inc. | -14.0% | $27.54 | $11.2B | 2.8x |
| EDU · New Oriental Education & Tec | -12.5% | $50.72 | $7.9B | 3.9x |
| LOGI · Logitech International S.A. | -12.1% | $98.27 | $14.1B | 3.4x |
| ZWS · Zurn Elkay Water Solutions C | -11.5% | $43.50 | $7.2B | 2.8x |
Overseas, rates and commodities
| Market | Close / level | Change |
|---|---|---|
| Nikkei 225 | 64,659.47 | +1.1% |
| Hang Seng | 22,958.65 | -0.6% |
| Shanghai Composite | 3,651.43 | -0.8% |
| DAX (morning) | 25,912.10 | +0.8% |
| FTSE 100 (morning) | 10,744.60 | +0.5% |
| USD/JPY | 157.86 | from 157.84 |
| EUR/USD | 1.1155 | from 1.1154 |
| Spot gold | $4,037.98 | -0.7% |
Asia closes, Europe and currencies from AP at 5:51 AM ET; gold from Reuters at 12:10 AM ET.
Crypto
| Coin | Price (about 7:45 AM ET) | 24h |
|---|---|---|
| Bitcoin | $79,847.67 | -1.20% |
| Ether | $2,322.48 | -1.60% |
| XRP | $1.29 | -2.50% |
Prices from CoinGecko. Bitcoin slipped below $80,000 overnight as tech selling and the Fed’s hawkish hold weighed on risk assets, with about $356 million of positions liquidated in 24 hours (CoinDesk). Most-traded coins and ETF flows are on Crypto Market.
Major cryptocurrencies — last 12 monthsComputed from raw prices · as of 2026-10-28Bitcoin1Y -28.1%81,204 · 1W -3.3%Ethereum1Y -40.6%2,365 · 1W -4.3%Solana1Y -47.2%102.58 · 1W -4.0%XRP1Y -48.9%1.33 · 1W -2.4%Tap for details
| Name | Last | 1D | 7D | 30D | 182D | 365D |
|---|---|---|---|---|---|---|
| Bitcoin | 81,204 | +0.5% | -3.3% | -2.8% | +7.2% | -28.1% |
| Ethereum | 2,365 | +0.7% | -4.3% | -12.1% | +4.9% | -40.6% |
| Solana | 102.58 | +1.3% | -4.0% | -13.7% | +23.6% | -47.2% |
| XRP | 1.33 | +0.1% | -2.4% | -11.1% | -2.8% | -48.9% |
Company & Tech News Roundup
- Anthropic: its S-1 for a Nasdaq listing under ANT still leaves the price range blank; revenue reached $16.3 billion in the first half of 2026 (SEC filing).
- GE Vernova (GEV): Q3 orders rose 96% organically to $29.3 billion and backlog hit $197 billion alongside its roughly $9 billion Trench Group deal (company 8-K).
- Wendy’s (WEN): Trian and partners proposed taking it private at $7.35 a share in cash with no financing condition (SEC filing).
- Ford (F): declared a $0.15 fourth-quarter dividend and kept 2026 adjusted free cash flow guidance at $6 billion to $7 billion (company 8-K).
- Shell (SHEL): announced a new $5 billion share buyback with its Q3 results (company release).
What strategists said
| Who | View |
|---|---|
| Kay Haigh, Goldman Sachs Asset Management | Expects the Fed to resume hikes in December (cautious) |
| Rick Gardner, RGA Investments | Sees fading election and Fed uncertainty supporting stocks (optimistic) |
| Glen Smith, GDS Wealth Management | Says investors are focused squarely on AI capex (neutral) |
Comments as reported by Kiplinger on Oct 28.
Upcoming watchlist
| Date | Event |
|---|---|
| Fri 10/30 | Q3 employment cost index (BLS, 8:30 AM); Bank of Japan decision |
| Tue 11/3 | Midterm elections; AMD Q3 results after the close |
| Fri 11/6 | October jobs report (BLS, 8:30 AM) |
| Pending | Anthropic IPO price range in an amended S-1 |
Asian chipmakers
Samsung Electronics slid 4.13% in Seoul when its record third-quarter profit came without a detailed new shareholder-return plan, while SK Hynix rose 2.62% (Korea Herald).
Charts are computed directly from raw prices; each shows its own data date. In this morning edition the charts use Wednesday’s (Oct 28) regular-session close, so they do not include premarket moves quoted in the text. On the web, tap a chart for the detailed table.
Premarket prices move until the 9:30 AM open; the figures above are as reported at the times shown. Reddit buzz and the unusual-volume screen are on Reddit Buzz and U.S. Stock Screener.
This report is for information only and is not investment advice.
Corrections
- 2026-10-29 · Removed the Korea market section to keep this edition focused on U.S. markets.
Sources
- Reuters – Nasdaq futures slide as mixed Big Tech results test AI trade (Investing.com)
- Reuters – Nasdaq futures slide, earlier version (SRN News)
- AP – World shares and U.S. futures are mixed after Alphabet's earnings disappoint (BNN Bloomberg)
- Reuters – Alphabet's heavy cloud spending drives bigger-than-expected cash burn (Investing.com)
- Alphabet – Q3 2026 earnings release
- Reuters – Microsoft beats quarterly cloud revenue estimates (MarketScreener)
- SiliconANGLE – Microsoft's stock rises on earnings and revenue beat
- ServiceNow – Q3 2026 results (SEC 8-K/A exhibit)
- Ford – Q3 2026 results (SEC 8-K exhibit)
- Caterpillar – Q3 2026 results (PR Newswire)
- Eli Lilly – Q3 2026 results (PR Newswire)
- Reuters – Merck tops third-quarter estimates (Investing.com)
- Shell – Q3 2026 results (GlobeNewswire)
- Reuters – Trading Day: Fed pauses, Big Tech reports (Investing.com)
- Kiplinger – Fed meeting live updates, October 2026
- Reuters – AI-related investment, consumers likely boosted U.S. growth in Q3 (SRN News)
- BEA – Release schedule
- BLS – October 2026 release schedule
- Reuters – Gold slips as markets assess Fed signals (Business Recorder)
- Korea Herald – Seoul shares down 1.24% as Samsung disappoints on shareholder returns
- Korea JoongAng Daily – KOSPI falls 1.24% as Samsung disappoints
- CoinGecko – Bitcoin, Ether and XRP prices
- CoinDesk – Bitcoin dips below $80,000 as tech risk aversion and a hawkish Fed weigh
- Anthropic – Form S-1 (SEC)
- AMD – Q3 2026 results date
- BLS – Employment Situation release schedule
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