Big Tech Sell-Off: Stocks Tumble Despite Strong Earnings

• The Nasdaq Composite led the market downturn, falling 1.57%, as major tech stocks faced a significant sell-off.
• Meta and Microsoft shares declined despite reporting better-than-expected quarterly earnings, primarily due to forecasts of increased future spending on AI and infrastructure.
• Alphabet defied the trend, with its stock jumping over 7% after posting strong results driven by its Cloud and YouTube advertising segments.
• The broader market also closed lower, with the S&P 500 shedding 0.99% and the Dow Jones Industrial Average slipping 0.23%.

Market Closes in the Red as Tech Giants Falter

The stock market ended Thursday on a downturn, with all three major U.S. indexes closing in negative territory. The tech-heavy Nasdaq Composite experienced the sharpest decline, pulling back 1.57% to close at 23,581.14. The S&P 500 shed 0.99% to finish at 6,822.34, while the Dow Jones Industrial Average slid 109.88 points, or 0.23%, to 47,522.12. The widespread sell-off was largely fueled by investor reactions to the latest earnings reports and future guidance from several Big Tech leaders.

Meta Plunges on Higher Spending Forecast

Despite a strong third-quarter performance that beat analyst expectations, Meta Platforms saw its shares plummet by more than 8%. The Facebook and Instagram parent reported adjusted earnings of $7.25 per share on revenue of $51.24 billion, surpassing LSEG estimates of $6.69 per share on $49.41 billion in revenue. However, the positive results were overshadowed by the company's revised outlook on capital expenditures. Meta announced it expects to spend between $70 billion and $72 billion, a significant increase from its previous guidance, as it ramps up investment in artificial intelligence. This forecast of higher future costs spooked investors, triggering a sharp decline in its stock value.

Microsoft Dips as Spending Concerns Loom

Microsoft faced a similar fate, with its stock falling 2% even after posting impressive fiscal first-quarter results. The company's Azure cloud business was a standout performer, with revenue soaring by 40%. However, during the earnings call, finance chief Amy Hood stated that capital spending is set to accelerate this fiscal year. This announcement tempered investor enthusiasm, causing the stock to retreat despite the strong earnings report.

Alphabet: The Exception to the Rule

In a stark contrast to its tech peers, Alphabet emerged as a market leader. The Google parent company saw its shares jump by more than 7% following the release of its stellar quarterly results. The search giant reported an adjusted $3.10 per share, easily beating the $2.33 per share expected by analysts. Revenue also exceeded forecasts, coming in at $102.35 billion against a consensus estimate of $99.89 billion. The strong performance was bolstered by significant growth in its Google Cloud and YouTube advertising revenues, proving to be a bright spot in an otherwise turbulent day for the tech sector.