US Stocks Fall as Alphabet Sinks on Growth Concerns

By the Editorial Team · Friday, October 30, 2026

Alphabet shares plunged nearly 12 percent after the company reported slower-than-expected growth and shrinking free cash flow, raising doubts about the returns on its heavy AI investments. This decline weighed on U.S. stocks, causing the S&P 500 to snap a three-day winning streak despite gains in other sectors and upbeat earnings from several major companies.

U.S. stocks declined on Thursday, weighed down primarily by a significant drop in Alphabet shares after the parent company of Google and YouTube reported slower-than-expected growth for the summer quarter. The results raised concerns about whether the company’s extensive investments in artificial intelligence (AI) will generate the anticipated returns.

As of mid-morning trading, the S&P 500 fell 0.3 percent, poised to end its three-day winning streak, while the Nasdaq Composite dropped 1.2 percent. The Dow Jones Industrial Average was down 0.2 percent, or 104 points, at 11:15 a.m. Eastern Time. Despite Alphabet’s steep decline, other stocks on Wall Street saw gains.

Alphabet’s shares plunged 11.8 percent, on track for one of its worst days since the company went public more than two decades ago. The decline came amid investor apprehension about the company’s growth prospects and its heavy spending on AI initiatives. Alphabet revealed that its free cash flow—a measure of cash available after capital expenditures—shrunk during the quarter, in part due to over $51 billion spent on property and equipment. This raised broader concerns within the AI sector regarding the sustainability of profitability and productivity benefits, particularly as borrowing costs rise, making further investments in data centers and AI hardware more expensive.

Without Alphabet’s substantial losses, the S&P 500 would have posted gains for the day. Several companies outperformed earnings forecasts, including KLA Corp., a semiconductor equipment manufacturer, which surged 6.7 percent. Pharmaceutical giant Eli Lilly gained 6.4 percent, Mastercard rose 4.7 percent, and Merck added 5.1 percent after reporting stronger-than-expected results.

Shares of DoorDash jumped 6.6 percent following the announcement of an agreement to acquire Instacart in a transaction valued at $17 billion. DoorDash also reported better-than-anticipated profitability and revenue for the quarter. Additionally, Norwegian Cruise Line Holdings rose 14.1 percent after beating earnings estimates, benefiting from higher-than-expected onboard spending by passengers during the summer cruise season.

Market optimism about corporate earnings growth remains elevated, underpinning recent equity gains despite ongoing concerns about high interest rates and economic headwinds. This sentiment contributed to the S&P 500 reaching a record high earlier this month.

In the bond market, U.S. Treasury yields cooled following a series of mixed economic reports. A preliminary estimate indicated that economic growth accelerated more than expected during the summer, fueled by consumer spending and business investment in AI technologies. However, income growth slowed in September, and inflation measures showed some deterioration. Weekly jobless claims declined, suggesting a stable labor market with relatively few layoffs.

The yield on the 10-year Treasury note fell to 4.98 percent on Thursday from 5.05 percent late Wednesday, continuing a retreat from a peak above 5.3 percent earlier this month—the highest level since 2002.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.