Nasdaq futures fall as Alphabet and Microsoft earnings diverge

Nasdaq 100 E-mini futures fell 1.22% on October 29 as contrasting earnings from Alphabet and Microsoft put the returns on artificial intelligence spending in focus. Investors also awaited U.S. economic data after the Federal Reserve kept interest rates unchanged.

At 4:09 a.m. ET, Nasdaq 100 E-minis were down 365 points. S&P 500 E-minis lost 31 points, or 0.41%, while Dow E-minis gained 185 points, or 0.35%.

Alphabet shares dropped 10.5% before the opening bell following disappointing search-advertising results and sharply higher cash consumption tied to its AI expansion. Microsoft rose 3.5% after cash flow exceeded expectations and the company projected strong growth in its cloud business.

Jeremy Saltzberg, VP and senior investment officer at Check Capital Management, said investors were examining how quickly AI investments could generate revenue relative to capital spending, with some becoming less willing to accept unrestricted expenditure.

Weakness extended across software and chip stocks. Fortinet lost 25.4% following its third-quarter results, and ServiceNow fell 19% after quarterly profit missed estimates. Nvidia declined 1%, AMD dropped 3.3% and Intel slipped 3.6%.

Marvell Technology shares fell 9.4% following media reports of advanced talks to acquire Lumentum Holdings, a maker of data-center optics. Lumentum gained 4.3%.

The September Personal Consumption Expenditures report and third-quarter GDP figures were due later on October 29. The CME FedWatch Tool showed traders assigning a probability above 81% to a December rate increase. Separately, Carvana rose 9.2% after quarterly revenue beat estimates, while Chipotle Mexican Grill gained 6.7% on stronger-than-expected comparable sales.