Premarket movers: Microsoft rises; Alphabet drags software stocks lower

Microsoft shares climbed around 2.8% in premarket trading after the technology giant reported fiscal first-quarter results that topped Wall Street expectations, supported by continued strength in its cloud business. Earnings came in at $4.89 per share on revenue of $92.28 billion, compared with analyst estimates of $4.72 per share and $90.61 billion in revenue.

Azure revenue jumped 48% year-over-year, helping Microsoft Cloud revenue rise 31% in constant currency to $63.9 billion. Azure, Microsoft’s cloud computing platform, surpassed $100 billion in revenue during fiscal 2026, underscoring the importance of cloud services to the company’s growth as investors scrutinize its AI spending.

Alphabet shares plunged more than 10% before the bell after the Google parent reported third-quarter earnings below expectations, with slower advertising growth overshadowing accelerating demand for AI-enhanced services. Earnings per share came in at $2.12, missing the $3.02 analyst consensus, while revenue rose 25% to $127.6 billion, slightly above estimates of $127.22 billion.

Advertising revenue from Google’s search business grew at its slowest pace in five quarters, adding to investor concerns about the returns on the company’s substantial AI investments. Management said users were embracing its AI Mode search feature, but those queries were being monetized more slowly than traditional searches.

Software stocks tumbled in premarket trading as disappointing results from Fortinet and ServiceNow intensified concerns that newer AI models could disrupt traditional software business models.

Fortinet plunged around 25%, while ServiceNow fell 18.1%. ServiceNow’s third-quarter results included its first adjusted earnings-per-share miss in six quarters, and its fourth-quarter revenue guidance of $4.25 billion to $4.26 billion fell below analysts’ expectations of $4.36 billion.

The declines spread across the sector, with Salesforce down 4.3%, Palo Alto Networks falling 6%, CrowdStrike losing 5% and Zscaler dropping 5.8%. Investors have increasingly questioned how AI could change demand for established software products and the economics of the companies that provide them.

Marvell Technology fell 9.5% in premarket trading after Bloomberg reported that the semiconductor company was in advanced talks to acquire Lumentum Holdings, a maker of optical and photonic components used in AI data-center infrastructure.

A deal could be announced as early as next week, according to the report. Lumentum shares rose 5.6% on the news. However, the potential transaction raised concerns about financing and the impact on Marvell’s near-term earnings, given Lumentum’s reported market capitalization of around $83 billion compared with Marvell’s valuation of approximately $221 billion.

Caterpillar fell 9.7% despite the heavy-equipment maker reporting a sharp increase in third-quarter profit, supported by continued demand for backup power equipment, turbines and construction machinery.

Adjusted earnings rose to $7.20 per share for the quarter ended in September, compared with $4.95 a year earlier. The company is closely watched as an indicator of global industrial activity, making its results a gauge of demand across construction and power-related markets. The share decline came despite the year-over-year earnings improvement.

Chipotle Mexican Grill shares rose 7% in premarket trading after the restaurant chain indicated that efforts to attract diners through new menu launches and marketing initiatives were beginning to pay off.

Executives said on the company’s post-earnings call on Wednesday that Chipotle expected comparable sales growth of around 3% to 4% by the end of the current quarter, compared with 2.1% growth in the three months through September. The improved outlook offered investors a more encouraging signal about customer demand and the company’s ability to revive sales growth.