The US stock market selloff arrived before most Americans had finished their morning coffee on Thursday, October 29, 2026. Nasdaq futures fell about 1% as Alphabet's disappointing earnings reignited Wall Street's deepest fear about the artificial intelligence boom: that the biggest technology companies are spending money far faster than they can earn it back. The Google parent plunged 10.4% in premarket trading, putting it on track to shed more than $400 billion in market value if the losses held, and dragging the whole technology sector down with it.
Thursday's US stock market selloff began overnight in Asia and gathered force as American traders woke up to Alphabet's results. The search giant reported third-quarter earnings on Wednesday evening that missed Wall Street's targets on both revenue and profit, while its cash burn surged as AI-related spending accelerated. Search advertising revenue, still the company's core business, grew more slowly than expected, and investors punished the stock immediately: Alphabet fell 10% in after-hours trading on Wednesday and extended the drop to 10.4% in Thursday's premarket session.
At 7:02 a.m. ET, Dow E-minis were down 59 points, or 0.09%, S&P 500 E-minis were down 15.25 points, or 0.2%, and Nasdaq 100 E-minis were down 278.75 points, or 0.93%, according to Reuters market data. The losses came just one day after all three major indexes had posted gains of less than 0.3%, rising for a third straight session after the Federal Reserve left its key interest rate unchanged, as expected.
The damage spread well beyond Alphabet. Cybersecurity firm Fortinet tumbled 26.2% after reporting third-quarter results, while software maker ServiceNow dropped 19.6% after missing third-quarter profit estimates. Other software names, including Zscaler and Salesforce, were among the sector's laggards as investors sold the whole group. In semiconductors, Nvidia slipped about 0.5%, AMD fell 2.5% and Intel dropped 3.5% ahead of its own results after the bell. Construction equipment maker Caterpillar fell 9.7% following its third-quarter results, and Marvell Technology eased 12.4% after reports that it is in advanced talks to buy data-centre optics maker Lumentum Holdings, whose shares rose 4.8%.
Not every stock fell. Drugmaker Eli Lilly climbed 3.9% after forecasting annual revenue above Wall Street's estimate, car e-commerce platform Carvana jumped 7.5% after surpassing third-quarter revenue estimates, and Chipotle Mexican Grill gained 7% after reporting better-than-expected quarterly comparable sales. But the winners were not enough to offset the technology rout, and WTI crude oil futures slipped 1% to $101.90 a barrel while gold futures ticked lower to $4,040 an ounce and bitcoin traded around $80,100.
Thursday's US stock market selloff did not come out of nowhere. For months, investors have cheered the largest technology companies as they poured hundreds of billions of dollars into data centres, chips and power to build artificial intelligence systems. Alphabet alone kept its 2026 capital expenditure forecast at $195 billion to $205 billion and has warned that spending in 2027 will rise significantly above $300 billion. Its third quarter produced negative free cash flow of $9.07 billion, the second straight quarter in the red, even as its cloud business grew 103%.
That combination — spectacular growth in cloud revenue alongside a deteriorating cash position — is exactly what is splitting the market. Microsoft offered the counter-example on Wednesday evening: the software giant delivered a big cash-flow beat, forecast strong cloud growth, and saw its shares climb 2.1% in premarket trading, with some reports putting the gain as high as 3.5%. Investors, in other words, are no longer willing to give every hyperscaler a free pass. They want proof that the spending is paying off, company by company, quarter by quarter.
The unease has been building all month. Investor enthusiasm for the AI trade has been tempered by worries that debt-fuelled spending will be harder to justify as borrowing costs climb, with the yield on the 10-year Treasury holding around 5.02%. Anthropic's disclosure of its US IPO filing on Monday offered only brief relief before the fears resurfaced. Asia felt the same chill overnight: MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.7%, South Korea's Kospi fell 2.6% after a nearly 7% surge a day earlier, mainland China's blue chips fell 0.9%, and Japan's Nikkei trimmed its gains to be up 0.3%.
Samsung Electronics captured the mood perfectly. The South Korean giant said on Thursday that its operating profit rose nearly ninefold to a record high in the third quarter, driven by robust demand for AI chips — and its shares still slid more than 4%, dragging the broader Kospi lower, after the company stayed silent on plans to boost shareholder returns. Even a record profit was not enough when investors are asking harder questions about what comes next.
The US stock market selloff matters because it tests the central investment story of the past two years. The AI trade has carried the S&P 500 and the Nasdaq to record after record, and the biggest technology stocks now make up so much of the indexes that a single earnings miss can move the whole market. Alphabet's 10.4% premarket slide alone threatened more than $400 billion in value — a sum larger than the entire market capitalisation of most companies in the index.
The Federal Reserve's decision on Wednesday added to the tension. The central bank held interest rates steady, as widely expected, opting to delay any changes to borrowing costs until after next week's midterm elections while it awaits further data on inflation. Two committee members voted for a rate hike, and Chair Kevin Warsh struck a more confident note on the inflation outlook, sparking a rally in Treasuries. Traders still see a more than 81% chance the Fed will hike interest rates in December, according to the CME FedWatch Tool, as key inflation metrics remain elevated amid the oil shock linked to the Middle East conflict, and money market participants are pricing in an additional rate hike by mid-2027, according to LSEG data.
That backdrop makes Thursday's earnings even more important. With rates staying higher for longer, the cost of funding trillion-dollar AI buildouts rises, and the patience of shareholders shortens. The third-quarter GDP reading, released on Thursday, showed the economy growing at a 3.4% annual rate, beating forecasts — but strong growth has not been enough to calm a market that is suddenly asking whether the AI boom's bills are coming due before its profits.
"Investors are starting to scrutinize monetization timelines versus the capital expenditure burn rates. Some investors are no longer giving all hyperscalers a 'free pass' to spend without limit," said Jeremy Saltzberg, vice president and senior investment officer at Check Capital Management, in comments carried by Reuters.
Jamie Hannah, deputy head of investments at VanEck, offered a similar explanation for Alphabet's fall, telling Reuters that the company's traditional advertising business has been affected by the very AI boom it is funding. "The reason why Alphabet is down is because their traditional revenue service of ad generation has been impacted by the very thing which is the AI boom. So it's causing a mix of results for Google," Hannah said.
Analysts at Deutsche Bank highlighted the same question in their own notes, asking whether the payoffs from AI investments will materialise quickly enough to justify the escalating capital expenditures. The split between Alphabet and Microsoft on Thursday gave the debate a live test case: two companies spending at a similar scale, judged very differently on the cash they actually generated.
For ordinary investors, the US stock market selloff is a reminder of how concentrated the market has become. Retirement accounts, index funds and pensions are all heavily exposed to a handful of technology giants, so a 10% fall in one of them moves portfolios even for people who never bought the stock directly. The selloff also lands days before the November 3 midterm elections, when voters are already judging the economy on prices, jobs and the cost of living — and a falling stock market rarely helps the party in power, whatever the underlying cause.
For the technology industry, the stakes are strategic. If investors keep demanding faster returns on AI spending, companies may be forced to slow their data-centre buildouts, renegotiate chip orders or raise more debt at higher rates. That would ripple through suppliers from Nvidia and AMD to the optics makers, memory chip producers and power companies feeding the boom. Samsung's share drop on a record profit is the warning: even delivering the numbers may no longer be enough if the story about tomorrow disappoints.
For the broader economy, the question is whether the selloff stays contained in technology or spreads. Caterpillar's 9.7% fall shows that industrial companies are not immune, and a wider loss of confidence could tighten financial conditions just as the Fed is weighing a December hike. On the other hand, the economy's underlying data — 3.4% GDP growth, resilient consumer spending, a steady jobs market — gives the market a cushion that it did not have in past selloffs driven by recession fears.
All eyes now turn to Thursday evening, when Amazon and Intel report after the closing bell. Amazon guided revenue of $197 billion to $202 billion for the third quarter, with Wall Street expecting around $202.2 billion and adjusted earnings of about $1.97 per share, while its Amazon Web Services cloud business is projected to grow around 37%. Investors will watch AWS growth after its 37% second-quarter print, whether capital spending rises above about $220 billion for the year, and what the company says about holiday-season demand.
Intel's report will be read just as closely, after its shares fell 3.5% in Thursday's premarket trading. A key inflation reading is also due, a day after the Fed's decision, and traders will parse it for clues about the December meeting. If Amazon and Intel reassure investors, Thursday's selloff could prove to be a one-day air pocket. If they disappoint, the debate about AI spending — and whether the boom is built on profits or promises — will only intensify into next week's elections.
US stocks fell because Alphabet's third-quarter earnings missed Wall Street's targets and showed surging AI-related cash burn, reigniting fears that technology giants are spending faster than they can earn. Nasdaq futures fell about 1%, and weak results from Fortinet, ServiceNow and Caterpillar deepened the selloff.
Alphabet shares slid 10.4% in premarket trading on Thursday, October 29, 2026, after falling about 10% in after-hours trading on Wednesday. The drop put the Google parent on track to lose more than $400 billion in market value if the losses held.
No. Microsoft rose 2.1% after a cash-flow beat, Eli Lilly climbed 3.9% on a stronger revenue forecast, Carvana jumped 7.5% and Chipotle gained 7%. The selloff was concentrated in technology and software, while the Dow futures slipped only 0.09%.
The Fed held interest rates steady on Wednesday, October 28, delaying any change until after the November 3 midterms. Traders still see a more than 81% chance of a December rate hike, and higher-for-longer rates make it harder to justify debt-fuelled AI spending.
Amazon and Intel report after the close on Thursday, October 29. Amazon's AWS growth, its capital spending plans and its holiday guidance will be the key tests of whether AI investment is translating into profit.
Related coverage: US GDP Q3 2026: Economy Grows 3.4% as Investment and Spending Beat Forecasts, Eli Lilly Q3 Earnings Beat as Mounjaro and Zepbound Drive $24.4 Billion Quarter, and Marvell-Lumentum Deal Talks: Chipmaker Nears $83 Billion AI Optics Megadeal.
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