WallStreetBets' favorite tickers went in opposite directions in premarket trading Thursday, as a fresh batch of Big Tech earnings delivered both winners and losers. Alphabet and ServiceNow fell sharply after their quarterly reports, while Microsoft and Meta edged higher. Away from earnings, takeover speculation gave optical components maker Lumentum a lift.
The split underscores how earnings season can reset a stock's story overnight. For everyday investors, the moves are a reminder that a single quarterly report can dramatically change the value of a company — and the options tied to it.
Alphabet and ServiceNow stumble
Alphabet dropped 10.3% in premarket trading after reporting a third-quarter profit decline and revenue that came in below analysts' expectations. The Google parent has been a core holding for many retail investors, and its stumble shows that even the biggest tech names are not immune to disappointment.
ServiceNow had the roughest reaction of the group, sliding 18.5% after its third-quarter non-GAAP results missed forecasts. The software company is widely held by growth investors, and the sharp decline is a reminder that even popular software stocks can be re-priced in a single session when numbers fall short.
In contrast, Microsoft rose 2.7% after beating expectations for adjusted profit and revenue. Meta was modestly higher as well, though the company did not see the same pop as Microsoft. The divergent reactions highlight how investors are rewarding companies that deliver on the bottom line while punishing those that miss.
Takeover talk lifts Lumentum
Not all the premarket moves were tied to earnings. Lumentum gained 5.2% after Bloomberg reported that Marvell Technology is in advanced talks to acquire the company. The news shows that merger speculation can move prices on its own, even outside regular trading hours.
When headlines hit after the close or before the open, the first wave of trading can be thin. That means prices often gap to a new level rather than inch there gradually. For investors, that can mean a stock opens far from where it closed the previous day, and the move can be difficult to trade around.
What it means for options traders
Big earnings moves don't just change the share price; they also change how options are priced. For those holding short-dated options on names like Alphabet or ServiceNow, the premarket gap can be especially painful.
First, an overnight gap can flip an option's delta — a measure of how much the option price typically moves when the underlying stock moves. A contract that behaved one way the day before may suddenly behave very differently, because the stock has already jumped or fallen.
Second, once earnings are public, implied volatility — the market's estimate of how much the stock might swing in the future — often drops because the uncertainty is gone. This is known as an implied-volatility crush, and it can knock down both call and put prices even if the stock stabilizes after the open.
Put together, short-dated options on headline names can lose value quickly. The biggest swings often happen right at the open, when bid-ask spreads are wider, making it harder to get a good fill.
Broader market context
The earnings split comes as investors are already focused on how Big Tech's massive spending on artificial intelligence is affecting cash flow. As Microsoft's cloud surge beats Alphabet, the market is rewarding companies that can show AI investments are paying off, while punishing those that are spending heavily without clear returns.
The reaction in Asia and Europe has been mixed, with AI earnings split hitting Asian markets as cash flow takes center stage. In Europe, earnings season is putting 2026 targets under the microscope, as investors look beyond the current quarter.
For everyday investors, the key takeaway is that earnings season is a time of heightened volatility. Stocks that were market darlings can fall sharply, while others can surge. It's a reminder to focus on the long-term fundamentals of a company rather than getting caught up in a single day's move.
As always, past performance is not a guarantee of future results, and it's important to do your own research before making any investment decisions.
