NASDAQ, S&P 500, Dow Jones decline as Alphabet earnings disappoint investors

Wall Street ended in red on Thursday as Google parent Alphabet's revenue miss and rising artificial intelligence (AI) spending spooked investors.

Tech-heavy NASDAQ descended 1.42% to settle at 26,173.45. The S&P 500 index closed 0.30% lower at 7,720.39, while the Dow Jones Industrial Average fell 0.25% to 52,342.56.

The revenue stood at $127.59 billion in the latest third quarter, reflecting an increase of 25% year-on-year from $102.6 billion a year back. However, it was below analysts' expectations of $128.22 billion.

The company recorded a negative free cash flow of $9.07 billion compared to a positive free cash flow of $2 billion estimated by the analysts. The California-headquartered firm guided for $195-$205 billion in capital expenditure and forecasted raising it to $300 billion in fiscal 2027.

"Our AI investments are driving overall Search query growth, including commercial queries. In fact, our year-over-year query growth rate is the highest it’s been in the last five years. Google Cloud revenues grew 103%, powered by huge demand for our AI infrastructure and AI solutions. We’re also seeing strong demand for our TPU systems across a wide range of customers," Sundar Pichai, CEO of Google and Alphabet, said.

Marvell Technology, SanDisk Corporation, CoreWeave and Micron Technology were down 13.23%, 5.31%, 4.99% and 4.98%, respectively.

Software stocks such as ServiceNow and Fortinet plunged 26.95% and 20.09%, respectively, after earnings.

Honeywell Aerospace, Caterpillar, Baxter International, Teradyne, Nebius Group NV, Alnylam Pharmaceuticals, Teradyne, Salesforce, Amazon.com, NVIDIA Corporation, Microsoft, Cognizant Technology Solutions Corporation, Datadog, and Cisco Systems also ended in red.

Brent Crude, the international standard, was up 1.44% to $112.40 per barrel, while West Texas Intermediate (WTI) rose 1.57% to $103.60 a barrel.