Nasdaq 100: Can Strong Microsoft Results Offset Alphabet’s Earnings Miss?

• Alphabet’s results have revived doubts about the returns on massive AI investments.

• Microsoft offers a counterpoint, but investors are becoming more selective about tech earnings.

• GDP, core PCE, and key Nasdaq levels may now determine whether caution deepens.

Disappointing results from a couple of major global technology names have put the AI trade back under scrutiny, with Nasdaq 100 futures falling around 1% after fading the post-FOMC uplift seen overnight. Concerns that the trillions of dollars being committed to artificial intelligence may not generate sufficient returns were reignited by Alphabet’s (NASDAQ:GOOGL) results. The Google parent pointed to signs that its AI search products are beginning to weigh on its core advertising business, while both earnings and revenue fell short of expectations. The combination has raised fresh questions over whether the scale of Alphabet’s AI investment can ultimately be justified by the returns it generates.

The picture is far from uniformly negative, however. Microsoft (NASDAQ:MSFT) delivered a much stronger set of numbers, with robust Azure growth, resilient AI demand and an upbeat cloud outlook. Shares were around 3.5% higher pre-market, providing some offset to the weakness elsewhere in the sector.

Tech Underperforms

The broader equity picture is mixed, but technology-heavy indices are clearly underperforming. Alphabet shares were down around 10% pre-market, while the weakness has spread into other parts of the AI and semiconductor complex.

Samsung Electronics fell around 4% despite reporting a 15-fold year-on-year increase in chip profits, helped by strong demand for AI-related memory. Investors instead focused on the lack of new shareholder-return measures, while the company’s plan to increase FY26 capital expenditure by more than 60% also raised questions about the amount of investment required to keep up with AI demand.

That makes the earnings backdrop increasingly two-sided. Strong demand for AI infrastructure remains evident, but investors are becoming less willing to reward spending simply because it is labelled as AI-related. The key question is increasingly whether these investments can translate into sustainable earnings and cash flows.

Europe has also delivered one of its busiest earnings sessions of the season, with results offering a mixed picture rather than providing a clear directional signal for the broader market.

GDP and Core PCE in Focus

With the initial dovish reaction to Wednesday’s FOMC decision fading, attention is turning back towards the data. US GDP and core PCE inflation are the main highlights today and could prove important for rate expectations.

The September core PCE reading is expected to show a 0.3% month-on-month increase, which would reinforce the picture of relatively sticky inflation. Third-quarter GDP is meanwhile forecast to show annualised growth of around 3.2%, with consumer spending and technology investment continuing to support the US economy.

That combination would likely reinforce expectations of another rate hike in December. Even if oil prices ease from current levels, the broader inflation and growth picture remains firm enough to keep the Fed on a hawkish path.

Nasdaq 100 Technical Analysis

The Nasdaq 100 futures fell back from around the 30,000 level overnight after failing to hold above the 21-day exponential moving average.

The index has increasingly been looking bearish following the break of this bullish trend line a few weeks ago. Unless that trend line is reclaimed, I think we need to proceed with a degree of caution as the market continues to digest the latest earnings and decides whether to make a deeper move lower, or consolidate before the next move.

For now, consolidation remains the name of the game. It remains very much a level-to-level market.

The most recent significant low, hit in mid-September, comes in at 28,816. That is an important level and, for me, the line in the sand. If it breaks, we would have a clear lower low in place, strengthening the bearish technical picture.

In the short term, support comes in at 29,500. Below that, we have 29,200 as the next area of support.

In terms of resistance, 30,000 remains a key psychologically important level. Above that, the backside of the broken trend line comes in around 30,340.

A sustained move above that area would start to improve the technical picture and could open the door towards the previous highs.

For now, though, the bias remains cautious while the Nasdaq 100 trades below the broken trend line.

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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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