Stock Market Today: Alphabet Plunges 13% on Earnings Miss, Dragging Nasdaq Down 1.5% Despite Strong GDP Data

New York, Oct. 29, 2026 — U.S. stocks opened sharply lower on Thursday, with the Nasdaq Composite tumbling as Alphabet suffered its steepest one-day decline in years following a disappointing earnings report that reignited fears about the cost of the AI arms race, even as stronger-than-expected economic growth data limited the damage.

The Nasdaq Composite dropped 1.5% to 26,149.27 in early trading, while the S&P 500 shed 0.4% to 7,711.73 and the Dow Jones Industrial Average slipped 0.2% to 52,346.66 .

Why Did the Stock Market Fall Today?

1. Alphabet’s earnings miss sparked a broad AI-spending selloff. Google’s parent company plunged nearly 13% after reporting third-quarter results that fell short on both profit and revenue. Earnings per share came in at $2.12**, far below the **$2.99–$3.02** consensus, while revenue of **$127.58 billion missed the $128.22 billion** estimate . More concerning to investors: free cash flow deteriorated to **negative $9.07 billion, far worse than the negative $3.5 billion** expected, as capital expenditures surged **114% year-over-year** to **$51.36 billion . The results crystallized fears that massive AI infrastructure spending is crushing cash generation without delivering commensurate returns.

2. Caterpillar slumped on AI-spending worries. The industrial giant fell 8.6% despite beating third-quarter estimates, as investors worried that slowing AI capital expenditure could ripple through the industrial economy .

3. Neocloud and AI infrastructure names sold off. Nebius dropped over 6%, CoreWeave fell nearly 6%, and IREN declined over 4% after Microsoft’s capital expenditures came in below expectations, raising concerns about the pace of data center buildouts . Microsoft itself rose over 3%, however, as its cloud growth outlook eased spending fears .

What Economic Data Limited the Decline?

The Commerce Department reported that third-quarter U.S. GDP grew at an annualized rate of 3.4%, surpassing the 3.0% consensus estimate and reflecting resilient consumer spending . The strong data provided a counterweight to the Alphabet-driven tech selloff, with analysts noting that the economy’s underlying strength remains intact.

“The macro numbers definitely helped” to limit the decline, said Adam Sarhan of 50 Park Investments. “Overall, the market’s happy with this report. It shows the economy continues to grow” .

Which Stocks Moved the Most?

On the upside:

• Microsoft gained 3.78% after its FY2027 Q1 results beat expectations, with Azure revenue accelerating 48% and capital expenditures coming in below forecasts
• Ford climbed 1.6% following its earnings report
• Chipotle jumped after comparable sales beat estimates

On the downside:

• Alphabet plunged nearly 13%, its worst session in years
• Caterpillar slumped 8.6% on AI-spending concerns
• ServiceNow slumped after a third-quarter profit miss
• Marvell Technology fell on reports it is in advanced talks to acquire Lumentum

What Did the Fed Signal on Wednesday?

The selloff followed Wednesday’s Federal Reserve decision to hold rates steady at 3.75%–4.00% in a 10–2 vote, with Governors Lisa Cook and Beth Hammack dissenting in favor of an immediate quarter-point hike . Fed Chair Kevin Warsh emphasized that inflation remains above the 2% target and declined to characterize financial conditions as “tight,” a signal interpreted by markets as leaving the door open for further tightening . Futures markets now price rate hikes in December and March 2027 .

What’s Next for Investors?

Attention remains on the ongoing earnings season, with Apple and Amazon due to report after Thursday’s close. Their results—particularly on cloud growth and AI capital expenditure guidance—will be critical in determining whether the Alphabet-driven selloff represents a sector-specific repricing or the start of a broader tech correction. The 10-year Treasury yield rose above 5.04% following the Fed decision, keeping pressure on equity valuations .

---

Key Takeaways (Quick Summary)

• Nasdaq fell 1.5% to 26,149.27 in early trading; S&P 500 dropped 0.4%; Dow slipped 0.2%
• Alphabet plunged nearly 13% on an EPS miss ($2.12 vs. $2.99 consensus) and negative free cash flow of -$9.07 billion
• Caterpillar slumped 8.6% on AI-spending worries despite an earnings beat
• Q3 GDP grew 3.4%, beating the 3.0% estimate and limiting losses
• Microsoft rose 3.78% on strong Azure growth and capex discipline; neocloud stocks fell
• Fed held rates at 3.75%-4.00% in a 10-2 vote; Warsh left door open for further hikes
• Apple and Amazon report after the close, a critical test for the AI trade