US stock futures fell Thursday, dragged lower by a plunge in Alphabet Inc. after disappointing results revived investor concerns that the company is losing ground despite massive artificial intelligence spending. Contracts on the tech-heavy Nasdaq 100 Index were down 1.2% as of 8:15 a.m. in New York, while S&P 500 futures fell 0.4%.
Alphabet fell 11% in premarket trading, setting the stock up for its biggest-ever market value wipeout, after the company reported weak search and advertising sales that reinforced worries about AI's threat to its core business. Michael O'Rourke, chief market strategist at Jones Trading Institutional Services LLC, said Google is "playing the AI Hunger Games from a position of weakness," noting it missed forecasts on essentially every key metric except cloud revenue. He added that advertising, a business Alphabet and Meta Platforms dominate globally, illustrates the key risk investors fear.
The latest earnings have renewed doubts over the AI trade, raising questions about whether heavy spending on the technology can generate returns quickly enough to justify lofty valuations. Investors were more encouraged by Microsoft Corp., which posted surging cloud growth while keeping capital expenditures in check, with its shares gaining 0.8% premarket. Amazon.com Inc. reports after the market closes Thursday.
Elsewhere, software shares slipped after disappointing quarterly results from ServiceNow Inc. and Fortinet Inc., which traded down 19% and 27%, respectively. Caterpillar Inc., which builds power-generation equipment used for data centers, slumped 10% premarket after third-quarter earnings only modestly beat expectations. DoorDash Inc. shares rose 5.9% after beating estimates and announcing its $17 billion deal to buy Instacart.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing