Alphabet sank more than 12% on Thursday, setting off a broad sell-off in US stocks as investors dumped AI-linked names and tech indexes slid. The Nasdaq Composite fell about 1.4%, while the Dow Jones Industrial Average and the S&P 500 both lost roughly 0.3%.
The move started with Alphabet, which disappointed investors with Q3 sales even as cloud growth climbed 103%. That was enough to shake confidence in the trade that has powered much of Wall Street this year: that heavy spending on AI will quickly translate into stronger sales, better margins and lasting returns. When those gains look less certain, traders do not wait long to mark down the stock.
Microsoft beat analyst expectations on both the top and bottom lines, but that did not keep the pressure off the group. Instead, Alphabet's weaker results and the renewed AI jitters spilled into the iShares Semiconductor Index ETF and software stocks, with Fortinet and ServiceNow taking double-digit losses after their own earnings reports. The reaction showed that investors were not just punishing one company. They were questioning the whole line of spending behind AI infrastructure.
The market backdrop made the turn sharper. The Federal Reserve held rates unchanged on Wednesday afternoon, and the decision came with two dissenters who wanted a rate hike amid sticky inflation. The Personal Consumption Expenditures index rose 3.6% year over year in September, reinforcing the view that prices are still hot enough to keep policy tight for longer. Tech had been on a positive run earlier in the week, but that support faded once earnings began to land.
Intel added to the mixed picture after the bell on Thursday. It reported better-than-anticipated third-quarter earnings, but its fourth-quarter revenue outlook of $15 billion to $16 billion fell short of Wall Street's $17 billion expectation. The company said the gap was driven by a worse-than-anticipated drop in PC revenue, and the stock fell more than 20% before trimming losses. Rivian also reported after the bell, topping expectations on revenue, loss per share and adjusted EBITDA, then boosted its guidance.
Amazon was still due to report when the first wave of selling hit. Its stock later tanked 10% in post-market hours before trimming losses, while the company kept 2026 capex at $220 billion for its AI infrastructure buildout. For investors, the day left a clear message: earnings can still move individual names, but the bigger question now is whether the market is willing to keep paying for AI growth before the spending starts to show up in the numbers.
