U.S. stock futures fall as Alphabet slides on weak profits, Microsoft companies say

Investing.com– U.S. stock index futures fell early Thursday, mainly pressured by a sharp decline by Google owner Alphabet after its third-quarter results fell short of expectations.

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Poor profits at memory chip giant Samsung also weighed, with the stock falling sharply in Seoul trading and triggering losses across the chipmaking sector.

Alphabet’s decline largely overshadowed Microsoft’s gains after its quarterly profits beat expectations. Markets also analyzed comments from the Federal Reserve which could announce further interest rate hikes in the coming months.

The Nasdaq 100 Futures slipped 1.1% to 29,647.75 points as of 2:43 a.m. ET (06:43 GMT). S&P 500 futures fell 0.3% to 7,760.0 points and Dow Jones futures rose 0.4% to 52,899.0 points.

Futures fell after a slightly positive session on Wall Street, where strong third-quarter results from memory chip giant SK Hynix (NASDAQ:SKHY) helped spur some gains in the technology sector.

Alphabets slips nearly 10%, Microsoft up on quarterly profits

Alphabet Inc (NASDAQ: GOOGL) was among the worst performers in the aftermarket late Wednesday, losing 9.8% after its third-quarter profit comfortably beat expectations.

While its revenue just beat expectations in terms of growing returns from its cloud unit, overall profitability was hurt by continued and outsized spending on artificial intelligence and data center infrastructure.

The earnings release added to Wall Street’s growing concerns over whether the billions of dollars invested in AI in recent years will be able to generate adequate returns – a notion that has battered tech stocks since late September.

Investors also largely ignored Google’s unveiling of a new AI model: Gemini 4 Carbon.

Samsung (KS:005930) added to concerns over increased AI spending, with the company’s results falling short of expectations as it planned more capital spending for the coming year.

Samsung’s mobile units division posted a second straight quarter of losses, adding to uncertainty over the impact of soaring component prices on consumer electronics.

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On the other hand, Microsoft Corporation (NASDAQ: MSFT) rose 2.7% in aftermarket trading after reporting both higher and lower results than the fiscal first quarter.

Microsoft’s Azure unit grew more than expected during the quarter, indicating that the tech giant is making good progress in its AI monetization efforts.

Alphabet and Microsoft are among the biggest investors in AI infrastructure — a group dubbed Wall Street’s “hyperscalers,” whose earnings offer the most insight into the AI ​​business and returns on this fast-growing technology.

Amazon.com Inc (NASDAQ:AMZN), another hyperscaler, is expected to report its September quarter results on Thursday.

Fed leaves rates unchanged, Warsh offers few direct clues

Wall Street ended slightly higher Wednesday after the Fed left interest rates unchanged at 4.0%, as widely expected, with two of the 12 members of the Federal Open Market Committee calling for a 25 basis point hike.

Fed Chairman Kevin Warsh, speaking after the meeting, highlighted recent strength in the economy but declined to provide forward guidance on interest rates.

He nevertheless reiterated the central bank’s commitment to achieving its annual inflation target of 2%. The Fed raised its rates by 25 basis points in September, in an attempt to curb increasingly stubborn inflation.

Warsh’s comments on the economy – where he highlighted the resilience of spending and stable employment – ​​were widely interpreted as hawkish, with Treasury yields rising sharply following his comments.

The 10-year yield rose above 5% after Warsh’s speech, although it pared some gains in evening trading.

Markets also increased their bets on a 25 basis point Fed hike in December, with CME Fedwatch indicating an 81.8% probability for a hike, up from 75.1% a week earlier.

Attention now turns to upcoming third-quarter gross domestic product data and PCE price index data for September, both of which are likely to factor into the Fed’s interest rate plans.

Core PCE data is the Fed’s preferred inflation gauge and is expected to remain well above the central bank’s 2% annual target in September.

Original article

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