Alphabet slides about 10% premarket as AI costs revive Big Tech spending fears

Nasdaq futures fell about 1% early on Thursday as results from Alphabet reignited worries about the cost of the artificial-intelligence race, Reuters reports. Investors were also waiting for a key inflation reading a day after the US Federal Reserve left interest rates unchanged.

Alphabet and Microsoft diverge

• Alphabet shares fell 10.4% in premarket trading after disappointing search-advertising results and a surge in cash burn as AI spending accelerated. If the losses held, the Google parent was on track to lose more than $400 billion in market value.
• Microsoft rose 2.1% after a large cash-flow beat and a strong cloud forecast.

Other movers

Fortinet fell 26.2% and ServiceNow 19.6% after their quarterly reports, Caterpillar dropped 9.7%, while Eli Lilly gained 3.9% on an annual revenue forecast above estimates. Intel and Amazon were due to report after the close.

“Some investors are no longer giving all hyperscalers a ‘free pass’ to spend without limit,” said Jeremy Saltzberg of Check Capital Management, quoted by Reuters.