Nasdaq 100: US Stocks Drop as Meta, Microsoft Rattle Sentiment; Apple, Amazon Up Next

Stocks Open Lower as Meta, Microsoft Drag and AI Costs Raise Eyebrows

Stocks opened under pressure Thursday as Wall Street digested a mixed set of Big Tech earnings and rising concerns about how much AI investment is actually paying off. Meta and Microsoft both slid sharply after pointing to bigger AI-related expenses, while Alphabet’s breakout wasn’t enough to turn the tide. A U.S.-China trade truce offered some cushion, but not much.

The Dow Jones Industrial Average shed 131 points, or 0.3%. The S&P 500 dipped 0.6%. The Nasdaq Composite dropped 0.8%, dragged by weakness in megacap names.Are Tech Earnings Creating More Questions Than Answers?

AI investment is picking up speed — and eating into profits. Microsoft fell nearly 2% after saying its stake in OpenAI shaved $3.1 billion off earnings last quarter. CFO Amy Hood warned that capital spending will rise again this year. Azure revenue was solid, but traders were more focused on margins.

Meta dropped 9% despite its best revenue growth in over a year. The company booked a $15.93 billion charge tied to Trump’s One Big Beautiful Bill Act and raised its capital expenditures guidance to $70–$72 billion, citing more AI infrastructure buildout. Even with a strong quarter, investors weren’t buying the spending ramp.

Alphabet was the standout, up more than 7% after smashing both revenue and profit expectations. YouTube and Google Cloud came in strong, and EPS of $3.10 blew past the $2.33 consensus. One winner wasn’t enough to offset broader pressure.

Will Apple and Amazon Keep the Pressure On — Or Offer Relief?

Apple and Amazon report after the close, and both are in the hot seat. Apple is coming off a stretch of tariff and supply chain noise — including a $1.1 billion hit from Trump’s latest round of China duties. Still, early data shows iPhone 17 sales up 14% in the U.S. and China compared to last year’s launch, and traders are looking for clarity on its AI plans.

Amazon’s report could be messier. The company is cutting 14,000 jobs as it leans harder into automation, and it’s still cleaning up from an AWS outage earlier this month. CEO Andy Jassy will likely face questions about whether AI investment is improving performance — or just trimming costs. Traders also want more visibility into cloud growth heading into year-end.

Did Geopolitics Help Put a Floor Under the Market?

Trump’s latest meeting with Xi produced a small but market-friendly outcome: fentanyl tariffs were reduced to 10%, and China agreed to delay rare earth export restrictions by a year. That helped send rare earth stocks higher, with USA Rare Earth up 5% and MP Materials gaining 3%. China also pledged to buy more U.S. agricultural goods. Not a game-changer, but enough to ease short-term pressure.

What Else Is Moving?

Eli Lilly rose 5% after beating on earnings and hiking full-year guidance. Align Technology jumped 14% on stronger-than-expected results. Advance Auto Parts surged 24% following a beat, while FMC cratered 29% after cutting its dividend and slashing guidance. On the downside, Chipotle tumbled 17% after lowering its sales outlook again, and Sprouts Farmers Market sank 22% on soft results and guidance.

What’s the Early Read?

This market wants to stay constructive — but it needs earnings to cooperate. Alphabet gave bulls something to hold onto, but the read-through from Meta and Microsoft is keeping the brakes on. With Apple and Amazon still ahead, positioning looks cautious.

Bottom line: Big Tech isn’t bulletproof, and AI spending is becoming a harder sell. Traders are watching margins, not just growth. Friday’s PCE inflation report could shift the focus, but for now, the burden is on earnings to carry the rally.

More Information in our Economic Calendar.