Asia stocks fall as Alphabet, Samsung results disappoint; more tech earnings loom

Asian stocks experienced a decline on Thursday, relinquishing early gains, as disappointing performances from Alphabet and a drop in Samsung Electronics' shares impacted technology stocks. Investors were holding out for earnings from Amazon and Intel for additional insights into the future of AI investments. U.S. stock index futures also dropped in Asian trading, with the Nasdaq 100 Futures falling 1.5%. Wall Street concluded slightly higher overnight.

Alphabet's (NASDAQ:GOOGL) stock plummeted approximately 10% in after-hours trading on U.S. markets following the company's results, which underperformed expectations and revealed extensive spending on artificial intelligence infrastructure. Microsoft (NASDAQ:MSFT), on the other hand, increased by around 3% after its results showed stronger-than-anticipated cash flow.

South Korea's KOSPI experienced a decline of about 3% due to Samsung Electronics (KS:005930) shares falling nearly 6%, despite the company reporting record third-quarter earnings. Investors were primarily concerned about a shortfall in semiconductor profit predictions and uncertainty surrounding potential shareholder returns. Samsung also failed to offer immediate details of further shareholder returns, stating it would finalize its next policy in January.

Investors were also disheartened by Samsung's lack of immediate announcements about additional shareholder returns, with the company promising to clarify its next policy in January. The mobile business of Samsung reported an operating loss of 800 billion won due to higher memory costs eroding profitability. The company projected semiconductor capital expenditure to be 76.8 trillion won in 2025, a 62% increase from 2025 levels, as AI-driven memory demand was expected to exceed industry supply by 2027.

Other markets saw declines as well, with China's Shanghai Composite falling 1.2% and the blue-chip Shanghai Shenzhen CSI 300 index slipping 1.2%. Hong Kong's Hang Seng remained largely unchanged, although its Hang Seng TECH sub-index dropped 2%. Japan's Nikkei 225 edged up 0.2%, after erasing most of its earlier gains, while the broader TOPIX index declined 0.3%.

Australia's S&P/ASX 200 gained 0.4%, and Singapore's Straits Times Index increased slightly by 0.1%. Investors were also preparing for the Bank of Japan's policy decision on Friday, following its two-day meeting that commenced on Thursday. The central bank is widely expected to maintain its policy rate at 1.25%, following a September increase, and potentially raise inflation forecasts as higher oil prices and a weak yen contribute to price pressures.

Market participants will closely examine Governor Kazuo Ueda's comments for clues on whether the Bank of Japan might raise rates again as soon as December. The Federal Reserve maintained interest rates steady on Wednesday, with two policymakers supporting a rate hike. Market expectations projected a 78% chance of a U.S. rate increase in December based on CME FedWatch, leaving investors vigilant for upcoming inflation data.

September's U.S. personal consumption expenditures price index, the Federal Reserve's preferred inflation gauge, is scheduled for release on Friday. Focus will later shift to Amazon and Intel, whose results and guidance will aid investors in determining if robust AI demand can sustain substantial spending on data centers, chips, and cloud infrastructure.