Wall Street ends lower as Alphabet revenue miss revives AI capex jitters

Wall Street closed lower on Thursday, Oct 29, 2026, with the tech-heavy Nasdaq leading the declines after Alphabet posted a disappointing revenue miss that reignited severe investor anxiety regarding the immense capital expenditures poured into artificial intelligence projects. The Google parent company disclosed a revenue shortfall alongside an accelerated AI-related cash burn, driving its shares down 12.6% and pulling the broader communication services sector downward.

Market jitters were already evident earlier in the week. On Wednesday, Federal Reserve policymakers chose to leave United States interest rates unchanged. Officials acknowledged that price pressures remain elevated and stated that the central bank would decide on its next move as it accumulates more information. A raft of economic data released on Thursday answered that call, featuring a first-look at third-quarter gross domestic product that showed the U.S. Economy grew faster than expected. At the same time, price growth continued to heat up due to a war-related oil supply crunch feeding into broader, systemic inflation.

Against this macroeconomic backdrop, the pullback in technology shares highlighted a growing investor focus on corporate financial health. Semiconductor stocks snapped a four-day winning streak, dropping 1.4% as market participants sought to distinguish between companies capable of funding their lofty artificial intelligence ambitions and those forced to burn through cash or borrow funds to realize their goals. Alphabet fell squarely into the latter category.

Despite the tech-led rout, broader market sentiment found some defensive footing in other sectors. Small-cap stocks outperformed, with the Russell 2000 index advancing 1.0%.

"A risk-off day like this, with small caps outperforming, is a good sign that thus far the market's interpretation of cracks in the AI story doesn't mean cracks in every corner of the market,"

Ross Mayfield, investment strategy analyst at Baird, via Reuters

Mayfield added that investors have plenty of alternative places to deploy capital outside of the artificial intelligence trade, noting that other market segments hold decent prospects.

All three major U.S. Equity indexes ultimately finished the session in negative territory. The Nasdaq Composite suffered the steepest drop, losing 365.13 points, or 1.37%, to close at 26,184.72. The S&P 500 lost 23.59 points, or 0.30%, finishing at 7,720.39, while the Dow Jones Industrial Average slipped 132.54 points, or 0.25%, to end at 52,342.56.

Corporate earnings reports continued to drive sharp individual stock movements as the third-quarter reporting season crossed its halfway point. According to LSEG data, 253 companies in the S&P 500 had reported results by Thursday, with 81% beating analyst expectations. Analysts currently expect aggregate third-quarter S&P 500 earnings growth of 31.0% year-on-year.

Heavy equipment maker Caterpillar topped quarterly profit estimates, but its shares tumbled 9.3% after management left growth targets unchanged. In the healthcare sector, Eli Lilly jumped 6.6% after the drugmaker lifted its revenue outlook on strong sales of weight-loss drugs. Merck advanced 3.8% after beating earnings expectations on the strength of its cancer drug Keytruda and its HPV vaccine Gardasil. Automotive giant Ford gained 12.4% following a third-quarter revenue beat.

Software equities faced broad weakness. Fortinet and ServiceNow both dropped more than 20% following their respective quarterly reports. Marvell Technology slumped 13.2% amid media reports that the company was in advanced talks to acquire data-center optics maker Lumentum Holdings, whose shares rose 0.6%. In extended trading, Amazon dropped 6.5% after issuing disappointing fourth-quarter sales guidance.

Trading activity across exchanges remained brisk. On the New York Stock Exchange, advancing issues outnumbered decliners by a 1.95-to-1 ratio, with 146 new highs and 201 new lows recorded. On the Nasdaq, 2,464 stocks rose and 2,308 fell, yielding a 1.07-to-1 advancing-to-declining ratio. The S&P 500 posted 19 new 52-week highs and 6 new lows, while the Nasdaq Composite recorded 88 new highs and 191 new lows. Total volume on U.S. Exchanges reached 17.05 billion shares, compared with the 17.09 billion average for the full session over the preceding 20 trading days.