Amazon and Alphabet are tumbling after earnings — here's what that could mean for the market

Amazon and Google parent Alphabet, half of the closely watched 'FANG' names, reported earnings after the bell Thursday.

Both industry leaders beat on earnings, but fell short of revenue estimates. The top-line miss sent their shares tumbling in after-hours trading.

Gina Sanchez, CEO of Chantico Global, said the market's response to that earnings beat could be the biggest tell as to whether a run from growth stocks is a longer-term trend.

"That's really going to be the litmus test of sentiment because these were the leaders," Sanchez told CNBC's "Trading Nation" on Thursday before the earnings releases "We need to see these companies re-establish leadership in order to feel like this latest stock rout was a short-term thing. If not it could be an indicator that this is a longer-term repricing."

Before October's sell-off, Amazon had surged 53 percent for the year, while Alphabet had added 14 percent. Stocks like FANG names Facebook, Amazon, Netflix and Google parent Alphabet had outperformed earlier in the year as investors proved willing to pay a premium for explosive growth.

However, recent volatility has markets shifting toward value names which focus on cheaper valuations relative to the rest of the market. So far this month, Amazon has dropped 11 percent and Alphabet 8 percent.

"The price action will likely disappoint as a result," Sanchez said in an email to CNBC after the earnings releases. "Not great as a market sentiment read."

Amazon's and Alphabet's misses have the potential to hang over the rest of the earnings season and send markets tumbling again, said Mark Tepper, president and CEO of Strategic Wealth Partners.

"These two companies definitely have the potential to really define this earnings season," Tepper said Thursday on "Trading Nation" before the earnings releases.

"Earnings were strong, but the revenue misses were really disappointing," Tepper said after the earnings announcements. "Unfortunately, it seems like that's becoming a trend as of late."

Alphabet and Amazon are just two names reporting on a busy afternoon for Wall Street. Other earnings reports out after the bell included Gilead Sciences, Intel, Chipotle, Expedia and Western Digital.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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