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AI Shake-Up: Microsoft Soars, Alphabet Falters
29 Oct
Summary
- Microsoft shares surged on strong cloud and AI results.
- Alphabet shares plunged due to slow ad growth and AI costs.
- Software stocks tumbled amid concerns over AI disruption.
In premarket trading on Thursday, U.S. technology stocks showed a stark divergence. Microsoft shares surged approximately 2.8% after reporting fiscal first-quarter results that exceeded Wall Street expectations. This performance was largely attributed to the continued strength in its cloud business, with Azure revenue jumping 48% year-over-year, contributing to a 31% rise in Microsoft Cloud revenue.
In contrast, Alphabet, the parent company of Google, saw its shares plunge more than 10%. The company reported third-quarter earnings that fell short of consensus, with advertising revenue from its search business experiencing its slowest growth in five quarters. This slowdown raised concerns about the monetization of its AI investments.
Software stocks also faced significant declines. Fortinet plunged around 25% and ServiceNow fell 18.1%, following disappointing results and revenue guidance. These downturns intensified worries that emerging AI models could disrupt traditional software business models and impact company economics.
Other notable stock movements included Marvell Technology falling 9.5% on reports of acquisition talks for Lumentum Holdings, and Caterpillar dropping 9.7% despite a sharp increase in third-quarter profit. Chipotle Mexican Grill shares rose 7% as new menu initiatives showed positive results.
