Alphabet shares fall over 10% after missing earnings and revenue forecasts

Alphabet’s worst post-earnings decline on record is dragging down Nasdaq futures and signaling deeper cracks in the artificial intelligence trade. The search giant’s double miss on earnings and revenue, combined with competitive pressure from AI chatbots, has shaken investor confidence in mega-cap tech stocks that once moved in lockstep.

• Alphabet shares fell over 10% in premarket trading, marking the first double miss on EPS and revenue since Q4 2022.
• Google Search revenue missed forecasts for the second consecutive quarter as AI chat and agents capture search volume.
• Microsoft’s lower-than-expected capex guidance is pressuring neocloud stocks despite Azure growing 48% year-over-year.

• 10% Alphabet share decline in premarket trading after earnings miss
• 48% Azure revenue growth, now Microsoft’s largest single business unit
• $97B Microsoft’s second-quarter revenue guidance, exceeding consensus forecasts
• $170B Microsoft’s full-year capex guidance, below prior expectations

CNBC reported that Alphabet is facing mounting pressure from artificial intelligence as investor concerns about competitive threats from AI chatbots and agents materialize in the earnings results. The search revenue miss represents a critical juncture for the company, as queries traditionally routed to Google Search increasingly flow to AI systems. Nasdaq futures are trading sharply lower ahead of Amazon’s earnings report later Thursday, with the market reassessing whether the mega-cap technology trade can continue delivering growth at current valuations.

Search revenue misses for second straight quarter

Search, Google’s dominant profit engine, underperformed revenue expectations for the second consecutive quarter. Gil Luria, analyst at D.A. Davidson, told CNBC’s MacKenzie Sigalos that this outcome aligns with long-standing investor fears about competitive displacement.

This may be the quarter we feared.

Gil Luria, D.A. Davidson

The double miss on both earnings per share and revenue marks Alphabet’s first occurrence of that outcome since the fourth quarter of 2022, underscoring the depth of the earnings shortfall.

Microsoft’s capex cut weighs on neocloud valuations

Microsoft’s earnings painted a more favorable picture for the software and cloud giant, with shares higher in premarket trading after Azure grew 48% and became the company’s single largest business unit. Chief Executive Satya Nadella guided to up to $97 billion in second-quarter revenue, surpassing analyst consensus.

The company’s full-year capex guidance fell to $170 billion, below market expectations.

That lower-than-anticipated capital expenditure forecast sent neocloud stocks into the red during premarket trading. Shares in Coreweave, Nebius and IREN all faced selling pressure as investors repriced expectations for sustained spending on artificial intelligence infrastructure. Cybersecurity names also declined sharply, with Crowdstrike and Palo Alto Networks both down more than 6%, alongside similar losses for Zscaler and Rubrik.

Magnificent Seven loses its monolithic identity

CNBC analysis shows that the Magnificent Seven cohort of mega-cap stocks no longer trades as a unified bloc. The divergence between Alphabet’s sharp miss and Microsoft’s strong results reflects the reality that investors must now discriminate between individual technology stocks rather than viewing them as a single trade. Amazon is scheduled to report earnings after the market close Thursday, with analysts bracing for another quarter of negative free cash flow despite capex of $5.8 billion.

The BlockWest read. The day’s action signals that the artificial intelligence infrastructure supercycle cannot distribute gains evenly across cloud platforms and search incumbents. Allocators betting on mega-cap tech as a uniform hedge should recalibrate: winners and losers are now defined by specific competitive positioning around AI, not sector membership alone.

Amazon’s earnings report after the close Thursday will test whether free cash flow pressures and capex commitments extend across the cloud industry, or whether Microsoft’s better-than-feared guidance represents an outlier among hyperscalers.

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