U.S. stock markets experienced a split session in after-hours trading Wednesday, as Alphabet's impressive earnings lifted the tech sector, while other major players faced declines. The Dow Jones Industrial Average fell 0.57% during regular trading, while the S&P 500 slipped 0.04% and the Nasdaq eked out a 0.04% gain.
Alphabet's Cloud Strength Drives Rally
Alphabet shares jumped over 7% after reporting first-quarter revenue of $109.9 billion, a 22% increase year-over-year. Google Cloud revenue surged 63% to $20 billion, marking the fastest growth since the company began disclosing cloud segment numbers in 2020. CEO Sundar Pichai attributed the growth to enterprise AI solutions.
Tech Giants Face Investor Scrutiny
Microsoft, Amazon, and Meta all fell in after-hours trading despite beating some estimates. Microsoft shares slipped more than 2% after Azure cloud revenue grew 40%, matching expectations but falling short of the faster pace at Google Cloud. Amazon shares slid roughly 3.7% after posting an operating income outlook wider than Wall Street expected, with quarterly capital expenditures reaching $44.2 billion. Meta shares dropped over 6% after the company raised its 2026 capex range to $125 billion–$145 billion from $115 billion–$135 billion.
Federal Reserve Holds Rates Steady
The Federal Reserve kept its key interest rate at 3.50%–3.75% in a divided vote, citing persistent inflation and global energy price pressures. The 8-4 split signaled a cautious approach, with three officials resisting easier policy and one member voting for a cut. The decision highlighted ongoing uncertainty from Middle East tensions and elevated energy costs.
Market Context and Sector Performance
Investors are balancing accelerating AI-driven revenue against rising costs across the board. Oil prices pushed close to $120 per barrel, and bond yields climbed after the Fed's announcement. Energy stocks were the standout among S&P 500 sectors during regular trading, while utilities and materials lagged. Beyond the mega-cap tech names, Robinhood dropped 13.2% after missing profit estimates, while NXP Semiconductors jumped 25.5% on a strong outlook. Starbucks added 8.5% and Visa rose 8.3%.
Outlook
Thursday's trading session will test whether Alphabet's cloud strength can lift the broader AI trade, or if investor focus will remain on Meta's higher capex, Microsoft's Azure performance, and the Fed's inflation concerns. The divergence among tech giants underscores the market's sensitivity to spending and revenue growth in the AI era.
