Alphabet Stock Sinks 13% as Nasdaq Drops on AI Spending Fears (30 Oct)

Alphabet revenue hit by AI infrastructure spending

Alphabet’s stock fell after the company posted weaker quarterly revenue and increased AI-related cash expenditures. Google's advertising revenue failed to meet analyst expectations, and free cash flow decreased as the company increased spending on AI infrastructure.

Increased usage of AI Mode searches led to lower-than-anticipated search revenue because these interactions generate less profit than traditional search methods. The decline mirrored heightened scrutiny of companies pursuing costly AI projects, particularly those financing growth with debt and large cash outflows.

Broader market performance and software sector pressure

The Dow Jones Industrial Average fell 0.25% to 52,345.80, while another report placed the decline at nearly 0.3%. The S&P 500 index also decreased by approximately 0.3% on October 29, 2026.

Software shares faced heavy pressure as Fortinet and ServiceNow each slipped more than 20% following their earnings releases. Meanwhile, the Russell 2000 index moved higher as investors sought opportunities outside the crowded artificial intelligence trade.

Ross Mayfield said, "There's plenty of other places to go with your money outside of the AI trade that have pretty decent prospects".

Mixed results for individual equities

Eli Lilly climbed after the company raised its revenue outlook due to strong sales of its weight-loss drug. Ford shares gained following a quarterly revenue beat.

Merck advanced after the company beat earnings expectations. Caterpillar fell despite topping quarterly profit estimates.

Federal Reserve holds rates amid economic data

The Federal Reserve kept interest rates unchanged. The central bank said inflation remained "elevated," indicating it needs further assessment before the next move.

GDP grew at an annualized rate of 3.4% in the third quarter, an increase from the 2.2% growth rate in the second quarter. The quarterly core PCE measure increased at an annualized pace of 2.5%. This figure was higher than the 2.4% expectation but lower than the 3.3% rate from the previous quarter.

Commodity prices and energy market constraints

Brent crude finished at $114.88 a barrel, down 44 cents. West Texas Intermediate crude fell 78 cents to $102.00 per barrel. Oil supply constraints linked to the war added to broader inflation concerns.

The TTF gas benchmark reached €100/MWh on October 28, 2026, its highest level since December 2022. Disruptions in Middle Eastern LNG shipping caused this increase.

The spot price of gold was $4,015.60 per troy ounce, a decline of over 1%. Silver was priced at $52.06 per troy ounce, a drop of more than 3%.

Geopolitical developments and ECB policy updates

Vice President JD Vance sent a letter to Iranian official Mohsen Rezaei to attempt to resume peace negotiations.

The European Central Bank maintained its deposit rate at 2.50%. Christine Lagarde announced she will depart from her position at the European Central Bank in February, earlier than her previously scheduled October departure.

Investors await Amazon earnings

Investors are waiting for Amazon’s quarterly results later on Thursday.