Wall Street’s technology rally hit a roadblock Thursday as investors digested contrasting Big Tech earnings, persistent inflation and the Federal Reserve’s decision Wednesday to leave interest rates unchanged.
The Nasdaq Composite fell approximately 1.4%, while both the S&P 500 and Dow Jones Industrial Average declined roughly 0.3%. [finance.yahoo.com], [alainguillot.com]
Once again, artificial-intelligence spending was at the center of the conversation. Investors rewarded some companies while taking a much more skeptical view of others, especially when spending and free cash flow entered the equation. [finance.yahoo.com]
Meanwhile, September’s PCE price index increased 3.6% year over year, keeping inflation firmly in the market discussion. [finance.yahoo.com]
Against that backdrop, one used-car retailer drove sharply higher while one of the world’s largest technology companies experienced a historic loss in market value.
💎 Diamond of the Day: Carvana (CVNA)
Carvana earns Thursday’s Diamond after shares surged 15.7%, even while the broader S&P 500 declined. [finance.yahoo.com]
The online used-car retailer reported record third-quarter retail unit sales and revenue. Carvana sold 217,385 vehicles to retail customers, up 39% from a year earlier, while revenue reached $8.04 billion, above the cited analyst estimate of $7.71 billion. [finance.yahoo.com]
Not everything in the report beat expectations. Earnings came in at $0.39 per share versus a cited $0.44 analyst estimate. [finance.yahoo.com]
Why It Shined
- Carvana shares gained 15.7% Thursday. [finance.yahoo.com]
- Retail vehicles sold reached a company record 217,385, up 39% year over year. [finance.yahoo.com]
- Revenue reached a record $8.04 billion, exceeding the cited $7.71 billion estimate. [finance.yahoo.com]
- Management said it expects 2026 adjusted EBITDA at the higher end of its $2.7 billion to $3.0 billion range. [finance.yahoo.com]
- EPS, however, fell short of the cited consensus estimate, an important counterpoint to Thursday’s positive stock reaction. [finance.yahoo.com]
That’s a particularly good earnings-season lesson for Diamonds & Dogs: a company doesn’t necessarily need to beat every estimate for investors to react positively.
Thursday, traders appeared to focus heavily on Carvana’s record sales and revenue.
🐕 Dog of the Day: Alphabet (GOOGL/GOOG)
There really isn’t much competition for Thursday’s Dog.
Alphabet, parent company of Google, fell roughly 12% to 13% following its third-quarter earnings report. [forbes.com], [wsj.com]
The magnitude of the move was extraordinary.
Forbes calculated that Alphabet lost approximately $480 billion in market capitalization during Thursday’s session. Another closing-market calculation put the loss at about $500 billion. [forbes.com], [stocktitan.net]
Why It Barked
- Alphabet shares declined roughly 12% to 13% Thursday. [forbes.com], [wsj.com]
- The decline erased approximately $480 billion to $500 billion in market value, according to the cited calculations. [forbes.com], [stocktitan.net]
- Third-quarter revenue of $127.6 billion was below the $128.2 billion analyst expectation cited by The Motley Fool. [fool.com]
- Google Cloud revenue nevertheless grew 103% year over year to $30.7 billion, exceeding the cited $29.2 billion analyst estimate. [forbes.com]
- Investors also focused on free cash flow and the scale of Alphabet’s AI-related spending. [forbes.com], [wsj.com]
Thursday’s selloff shouldn’t be interpreted to mean Alphabet’s entire business performed poorly. Cloud growth was substantial. The market reaction instead reflected how investors assessed the total report, expectations, spending and free cash flow. [forbes.com]
Important Disclosure
This commentary is provided solely for informational and educational purposes and should not be considered a recommendation or solicitation to buy, sell or hold any security, sector or investment strategy. The “Diamond” and “Dog” designations reflect notable market performance and/or publicly reported developments and are not intended as investment recommendations or assessments of future performance. Market-capitalization changes are estimates based on security prices and shares outstanding and may vary by data source or methodology. Analyst estimates are third-party expectations and may vary by source. Past performance does not guarantee future results. Investing involves risk, including possible loss of principal.