Alphabet Shares Slump After Earnings, Pulling the Nasdaq Lower

what happened

Alphabet, the Google parent, is on track for its worst trading day on record. According to the Wall Street Journal, the company could shed roughly half a trillion dollars in market value after earnings that failed to satisfy investors. Revenue from the core search business came in below expectations, partly because people are increasingly choosing "AI mode" queries, which generate less profit than conventional searches. The company also burned cash faster than analysts had forecast, a result of heavy spending on artificial intelligence infrastructure.

The selloff pulled the Nasdaq about 1.6% lower and revived worries about AI across the stock market.

Brent crude fell below $110 a barrel as traders pinned hopes on easing tensions in the Gulf region, after WSJ colleagues reported that Vice President JD Vance had sent a letter to a senior Iranian hardliner seeking to revive peace talks.

why it matters

Macro data added to the caution: the latest reading on the Fed's preferred inflation gauge still ran hot, while GDP showed the economy accelerating over the summer. Separately, Christine Lagarde will leave the ECB presidency early, opening a succession race while the bank faces bond-market stress in France and high energy prices. The ECB held rates steady on Thursday morning.

market impact

Nasdaq and big tech: doubts about AI spending weigh on shares. Oil: peace-talk hopes push Brent lower.

• ▼Nasdaq pressure down — doubts about the payoff from AI spending weigh on tech stocks
• ▼Brent pressure down — hopes of renewed talks with Iran reduce the geopolitical premium
• ▼Alphabet pressure down — weak search revenue and faster cash burn after the report

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