Alphabet, Software Stocks Slide as AI Trade Wobbles - Europe Market Wrap

The global technology rally lost momentum as disappointing results from industry heavyweights reignited doubts over whether massive artificial-intelligence investments will generate sufficient returns. Nasdaq 100 futures fell 0.8%, pointing to an end to the index’s three-day winning streak, while S&P 500 futures slipped 0.2%. Alphabet dropped 10% in US premarket trading after sales disappointed, fuelling concerns that Google is losing ground to AI rivals despite committing hundreds of billions of dollars to the technology.

Samsung Electronics fell 4.1% after chip profits missed estimates, capital expenditure increased and the company offered no new shareholder-return plan. The latest results have exposed fresh cracks in the AI trade, with investors questioning whether spending on the technology can generate returns quickly enough to justify elevated valuations. Amazon’s results Thursday and Apple’s next week will provide further tests, as markets demand clearer evidence that heavy investment is translating into stronger profits. There were some bright spots.

Microsoft rose 3.7% in premarket trading on solid cloud sales, while Oracle extended gains after surging 11% on its long-term free-cash-flow outlook. A gauge of Oracle’s credit risk improved by the most in nearly nine months. Earnings elsewhere were mixed. Caterpillar slumped 9% after forecasting only “moderate” sales growth in the fourth quarter, despite its exposure to power equipment for AI data centres.

Merck rose after raising its guidance, while Eli Lilly gained 5% following better-than-expected results.