Tech stocks have encountered a two-day selloff as investors expressed worries over the earnings reports of industry giants Alphabet and Meta, as reported by CNBC. While both companies delivered better-than-expected results, investors found concerning stories within each report. As a result, the Nasdaq has witnessed a decline of nearly 3.5% over the past two days.

Alphabet's earnings surpassed Wall Street estimates, with solid performance across various segments. However, market unease arose from the numbers reported by the Google Cloud division. The cloud group's quarterly revenue of $8.41 billion missed analysts' estimates of $8.64 billion, indicating a potential struggle in catching up to competitors such as Amazon and Microsoft in managing large-scale artificial intelligence workloads.

Meta, the parent company of Facebook, also reported better-than-expected results. However, CFO Susan Li's comments regarding the advertising market in the fourth quarter caused concern among investors. Li pointed out that the ongoing conflict in the Middle East and uncertainty surrounding ad spending had led Meta to provide a wider revenue guidance range than usual. Li noted, "We have observed softer ads in the beginning of the fourth quarter, correlating with the start of the conflict, which is captured in our Q4 revenue outlook."

Alphabet shares have taken a hit, declining approximately 12% over the past two days, while Meta experienced a drop of roughly 7%. Likewise, Amazon's stock has also seen a decline of more than 6% in anticipation of its upcoming third-quarter report. This trend reflects a shift in investor focus towards future prospects rather than the companies' strong performance in the past three months.

The year 2023 has been a remarkable one for mega-cap tech companies, as they have successfully rebounded after a challenging 2022. Meta stands as the second-best performing stock in the S&P 500, with a staggering 140% increase, only trailing behind AI chipmaker Nvidia. Alphabet and Amazon have also showcased significant gains, with jumps of 39% and 42% respectively.

However, amidst cost-cutting measures and a renewed emphasis on efficiency, broader economic uncertainty and high interest rates are causing concerns among investors. With ongoing conflicts in Ukraine and the Middle East, the global economy finds itself on shaky ground. Meta has explicitly highlighted these concerns to shareholders, resulting in a more cautious outlook.

While some analysts argue that the selloff may be an overreaction, others point out that it reflects the level of investor skittishness and the search for potential problems. Mark Avallone, president of Potomac Wealth Advisors, attributes the selloff to a hyperfocus on perceived issues rather than recognizing the overall strong performance from these companies.

As further tech giants, such as Amazon and Apple, prepare to release their earnings reports, the market remains on edge. Investors are keenly observing the tech sector and hoping for a more optimistic outlook as the year draws to a close.

In conclusion, the recent selloff in tech stocks, fueled by concerns surrounding the earnings reports from Alphabet and Meta, underscores the nervousness among investors. Despite both companies surpassing expectations, cautious sentiments regarding the Google Cloud division and the impact of geopolitical events on ad spending have contributed to the decline. As the tech sector faces increasing scrutiny, market participants anxiously await upcoming earnings reports to gauge the overall health and performance of the industry.