Earnings dominated stock market movements on Thursday, with investors closely scrutinizing quarterly results from some of Wall Street’s largest corporations. Market attention also turned to the significant meeting between President Donald Trump and Chinese President Xi Jinping, which generated considerable discussion among analysts and investors alike.
Among the notable post-earnings stock performances, Facebook’s parent company, Meta Platforms, witnessed a drastic decline of 11.3%. Although Meta reported third-quarter earnings and revenues that exceeded expectations, concerns over its increased spending overshadowed this achievement. The company elevated the lower end of its full-year expense forecast by $2 billion, now projecting total expenses of $114 billion to $118 billion for 2025. This marks a nearly 22% increase at the midpoint compared to the previous year. During the earnings call, Chief Financial Officer Susan Li indicated that total expenses are anticipated to grow at a significantly faster pace, primarily due to increased infrastructure costs linked to cloud services and depreciation.
Similarly, tech giant Microsoft saw its stock plummet by 2.9% despite beating analysts’ forecasts for its fiscal 2026 first quarter. The company reported capital expenditures of $34.9 billion, surpassing its earlier estimate of $30 billion from July. CFO Amy Hood acknowledged that capital spending for fiscal 2026 would exceed that of fiscal 2025 due to heightened investments in GPUs and CPUs, essential for its artificial intelligence infrastructure.
In contrast, Alphabet, the parent company of Google, experienced a rise of 2.5% in its stock price following an encouraging earnings report. The communication services company noted a substantial 35% year-over-year rise in third-quarter earnings, reaching $2.87 per share, with revenues climbing 16% to $102.3 billion, both of which beat analysts’ expectations. Google Services revenue rose by 14%, driven by robust YouTube ad sales, while Google Cloud revenue soared by 34%. Alphabet also increased its capital expenditures in response to business growth and demand from cloud customers. Analysts remarked on the company’s groundbreaking achievement of surpassing $100 billion in quarterly revenue, effectively quelling fears regarding its core search business amidst rising competition from generative AI.
On the other hand, Chipotle Mexican Grill faced a dramatic stock drop of 18.2%, the largest one-day decline for the company in 13 years. Although its third-quarter earnings of 29 cents per share met expectations, the revenue of $3 billion fell short as the company reported a 0.8% decline in traffic. Chipotle CEO Scott Boatwright attributed the disappointing performance to ongoing macroeconomic challenges affecting its primary demographic of consumers aged 25 to 35, who are facing various economic pressures, including unemployment and increased student loan repayments.
Amid the earnings turbulence, President Trump and President Xi Jinping held their first in-person meeting in six years. The two leaders reached several agreements, including Trump’s announcement to cut tariffs on China from 10% to 20% concerning fentanyl and a 12-month pause on reciprocal tariffs. In return, Xi authorized the purchase of U.S. agricultural products and postponed restrictions on rare earth minerals for one year. The discussions also touched on the ongoing conflict between Ukraine and Russia.
Despite these diplomatic efforts, the stock market reacted largely to the disappointing earnings reports. The Dow Jones Industrial Average fell by 0.2% to close at 47,522, while the S&P 500 dropped 1% to 6,822. The tech-heavy Nasdaq Composite saw a decline of 1.6%, finishing at 23,581.
