Alphabet stock drops 10% after quarterly revenue misses estimates

Alphabet Inc. shares plunged approximately 10 percent in after-hours trading on Wednesday following a quarterly report that fell short of investor expectations. The move weighed on Asian equity markets and U.S. stock futures on Thursday. The technology company, based in California, posted revenues that failed to meet forecasts, prompting questions about whether its sales growth can justify massive ongoing investments in artificial intelligence.

The drop in Alphabet shares contrasted with the performance of other tech giants. Microsoft stock gained nearly 3 percent in after-hours trading after the company reported earnings that exceeded estimates. This divergence underscores the pressure on markets that have been buoyed by high expectations surrounding the global artificial intelligence boom. The latest earnings season has tested the resilience of these high valuations.

In Asia, market reactions were mixed. Japan's Nikkei 225 index edged up 0.2 percent to close at 64,073.17. However, SoftBank Group shares, an investor in OpenAI, fell 0.5 percent. In South Korea, the Kospi index suffered a 2.2 percent loss, ending at 5,880.25. Samsung Electronics, a major component of that index, sank 5.4 percent. The decline occurred despite strong quarterly results, as the company's new shareholder return policy disappointed some investors. Meanwhile, memory chipmaker SK Hynix rose 1.6 percent, following a 10.9 percent surge the previous day.

Other Asian indices showed varied movements. Taiwan's Taiex index, which has benefited from the AI sector, declined 1.9 percent. Hong Kong's Hang Seng index rose by less than 0.1 percent to 23,101.86. The Shanghai Composite index shed 0.9 percent to 3,647.12. In Australia, the S&P/ASX 200 gained 0.5 percent to close at 8,888.50.

Central bank policy dominated the macroeconomic backdrop. The Federal Reserve held interest rates steady on Wednesday as it concluded its policy meeting. Two Federal Reserve officials voted in favor of a rate hike, and analysts indicate a December increase is likely because inflation remains elevated. Markets are also watching the European Central Bank, which meets later Thursday, and the Bank of Japan, which is expected to hold rates steady on Friday.

Commodity and bond markets showed specific shifts. Brent crude oil fell 1.2 percent to $110.32 per barrel. U.S. officials warned that renewed military action against Iran could occur after the November 3 midterm elections. This price remains well above the roughly $72 per barrel level seen before the Iran conflict began in late February. In the bond market, the yield on the 10-year U.S. Treasury eased to below 5.00 percent after briefly reaching around 5.04 percent on Wednesday. The 2-year Treasury yield steadied at 4.68 percent, down from over 4.77 percent on Wednesday.

Currency markets saw minor adjustments. The U.S. dollar fell against the Japanese yen to 157.72, down from 157.84. The euro traded at $1.1146, a slight decrease from $1.1154. Wall Street indices closed modestly higher on Wednesday, with the S&P 500 adding 0.3 percent, the Dow Jones Industrial Average gaining 0.2 percent, and the Nasdaq composite climbing 0.3 percent.