It was a big earnings day post market yesterday with Microsoft and Alphabet releasing Q3 earnings. Microsoft stock has jumped on a revenue and earnings beat. But the financial media are talking about Alphabet, and mainly how there is a stark difference between the cloud and AI sales between both companies.

Alphabet shares fell the most in a year after revenue from Google Cloud missed estimates. The stock sank about close to 9% in mid-day trading to $126.51. It’s headed for its steepest drop since a 9.1% decline on Oct. 26, 2022, which followed an earnings miss.

This fall came even with Alphabet beating Wall Street expectations on revenue and earnings per share. Revenue, excluding traffic acquisition costs for the third quarter, was $64.1 billion versus expectations of $63 billion. That’s higher than the $57.3 billion the company brought in during the same quarter last year. Adjusted earnings per share were $1.55. Analysts were expecting $1.44 per share.

While Microsoft showed accelerating growth in its Intelligent Cloud business, Google posted cloud revenue of $8.41 billion, compared to Street Account estimates of $8.64 billion.

“The disappointment at Google Cloud contrasted with better-than-expected Azure growth at Microsoft,” UBS analysts said.

Alphabet Chief Financial Officer Ruth Porat said that while cloud growth “remained strong across geographies, industries and products,” the expansion rate “reflects the impact of customer optimization efforts,” a phrase that generally refers to clients reeling in their spending.

KeyBanc analysts were also concerned with the results in comparison to Microsoft’s growth:

“While management notes Google Cloud Platform (GCP) continues to grow faster than reported results, we believe limited disclosures are creating concerns that Google lost share to Microsoft Azure, which saw growth accelerate 1 point to +28% y/y FX neutral growth,” they said.

Jefferies analysts noted Google Cloud grew 22%, slower than the 28% growth the company posted in the second quarter. They said that while interest in generative artificial intelligence is high.

Google has been pouring money into its generative AI efforts after being caught off guard by Microsoft, which began rolling the technology into its products in February after investing in AI company OpenAI. The AI efforts are also part of Google’s plan to slice away at rivals Amazon’s and Microsoft’s shares of the cloud computing market. Google is in third behind its Washington-based competitors.

The stock has gapped down hard and as said earlier, is the stocks worst daily performance since October 2022. The gap down is bearish, but bulls should be worried about other technicals. Not only is an uptrend line being broken, but potentially a close below the major support zone of 127.50. A close below this support would be a technical breakdown and could see the stock start a new downtrend with the first target coming in around $117.50.

With more tech earnings to come, it is worth noting that the Nasdaq is dropping with overall stock market weakness. The Nasdaq closing below recent lows would suggest the continuation of the new downtrend with a move down to the 13,600 zone.