Alphabet Plunges 13% After Earnings as AI Spending Fears Mount; Microsoft Flat

Alphabet shares fell 13% Thursday morning, putting the Google parent on track for its worst post-earnings trading day since its 2004 IPO, as investors focused on AI spending and cash flow. The stock was down 12.78% at $283.37 in early trading. A close below 9.77% would mark its largest post-earnings single-day decline ever. Third-quarter free cash flow came in at negative $9.07 billion, far worse than the $2.7 billion deficit analysts expected, while full-year capital expenditure guidance held at $195 billion to $205 billion. Microsoft, which also reported, was roughly flat. Its quarterly capex and finance leases totaled $45.2 billion, up 30% year over year but below the $50.67 billion consensus, and free cash flow remained positive at $18.63 billion despite a 27% decline. Alphabet's search advertising revenue rose 12% to $63.35 billion, missing estimates. Quilter Cheviot's Ben Barringer said Microsoft expanded infrastructure more judiciously while Alphabet's report was "messier," with a poorly handled earnings call weighing on shares.