Alphabet’s cloud revenue more than doubled. After $51.36 billion in capital spending, it reported negative $9.07 billion in free cash flow.
Demand is showing up. So is the cost of building for it.
Cloud Growth Comes With Large Spending
Microsoft reported $92.3 billion in revenue, up 19%. Azure grew 48%. Its $39.4 billion in capital spending was below the $46.6 billion expected.
One measure of future business was softer. Microsoft’s commercial remaining performance obligations, or contracted future revenue, stood at $677 billion, below the $705.6 billion expected.
Alphabet’s revenue rose 25% to $127.58 billion, but missed estimates. Cloud revenue reached about $30.7 billion. Search grew 12% to $63.35 billion and also missed estimates. Alphabet shares fell more than 9%.
Alphabet kept its full-year capital spending forecast at $195 billion to $205 billion and said spending would rise significantly in 2027. One commentator viewed the shares as fairly valued after the decline, pointing to weaker AI Mode search monetization and higher expected spending.
Meta and Anthropic Add to the Spending Question
A market summary reported that Meta plans $135 billion to $145 billion in capital spending in 2026 and a $25 billion stock offering. One commentator also cited negative $2 billion in quarterly free cash flow.
Meta now has Muse, a personal agent with a free tier and monthly plans at $20 and $100. Its plans to take a cut of agent shopping transactions are still unsettled. Users must opt out if they do not want their agent interactions used to train Meta’s models.
Anthropic’s IPO filing disclosed $112.4 billion in cash and $19.3 billion in short-term investments as of June 30, along with tens of billions in debt. It also listed $321.4 billion in estimated future lease obligations and $265.6 billion in expected future fixed or minimum-guaranteed commitments.
Anthropic later entered new and amended agreements with about $245 billion in minimum future payments. It has not given an updated aggregate commitment figure.
The filing describes a computing agreement with SpaceXAI worth up to $120.5 billion. Anthropic can cancel on 90 days’ notice after lock-in periods end in January and March 2027. One commentator wants more disclosure about how much of Claude runs on that supplier’s hardware.
Suppliers Report Demand; Commentators Question Returns
DA Davidson upgraded Broadcom to Buy and raised its target from $350 to $400 after reading Anthropic’s filing. The firm expects Anthropic to raise capital and Broadcom to meet its expectations. The Wall Street Journal reported that some banks had considered leaving a $63 billion Anthropic chip deal before Broadcom agreed to higher interest rates and stronger guarantees.
Supplier results show demand. SK Hynix reported Q3 revenue of $78.9 billion and operating profit of $62.8 billion, both above estimates. It guided to 25% growth in DRAM shipments next quarter and expects memory demand to outpace supply through 2030. Separate reports said Alibaba, Tencent and ByteDance are seeking memory contracts through 2035.
Vertiv reported $4.3 billion in revenue against a $3.8 billion estimate. Its free cash flow was $652 million against $373 million expected.
Oracle plans to offer more AI chip choices in its cloud, including expanded Nvidia Vera Rubin capacity and Google TPUs starting in 2027. It targets $30 billion in free cash flow by fiscal 2029 and at least $225 billion in revenue by fiscal 2030. One commentator questioned the spending needed to get there. Bloomberg also reported that Marvell is in advanced talks to buy Lumentum, which would bring together optical chips, lasers and transceivers.
Several commentators questioned the returns on AI investment. One cited $419 billion in AI-related bonds issued so far in 2026. Another said the tech and media momentum index was down 62% from its high. A separate commentator argued that AI may work as technology while its return on invested capital remains a “huge question mark.”
Rates and Other Market Moves
The Fed held rates at 3.75% to 4% in a 10-2 vote. Two officials wanted a hike. The Fed said the economy was expanding at a “strong pace,” while inflation “remains elevated.”
WTI moved above $102 and Brent neared $115. The Bank of Canada raised its rate to 2.5%, citing higher and more persistent inflation driven by energy prices.
September durable goods orders rose 1.8%, above the expected 1.4%. October consumer confidence reached 91.7, up from a revised 84.2. U.S. PCE inflation and GDP releases are due Thursday. One commentator cautioned that higher retail spending can reflect higher prices without more goods being bought.
ServiceNow raised its year-end AI annual contract value target to $1.7 billion, from $1 billion at the start of the year. One commentator questioned its growth at nearly 94 times trailing earnings. SoFi reported 44% revenue growth; Robinhood’s earnings per share missed estimates. After Fortinet’s share decline, one commentator questioned whether the reaction would spread across cybersecurity stocks. Waymo plans to expand its ride service, and Qualcomm and Anduril plan rugged laptops for government and emergency users in 2027.
Reuters described a crash in Chinese tech stocks amid worries about AI demand and export curbs. The Financial Times reported signs of buying by state-aligned funds and brokers. In Brazil, economic anxiety pushed down the real and Bovespa and put pressure on the re-elected president to announce budget cuts; a separate commentator focused on the president’s geopolitical positions. Reliance Jio rose 21% in its Mumbai debut. Bloomberg reported up to $1.6 billion in fully funded commitments for an IPO stake in Aliko Dangote’s refinery business.
One market post put U.S. household ownership of the equity market at about 42%. A separate October measure showed the equal-weight S&P 500 up 4.3%, versus 0.3% for the S&P 500. Fidelity reported a 10.5% rise in the average 401(k) balance from March through June.
Two final watchlist items were commentator views. One described a proposed Tesla and SpaceX merger as an example that could give Musk about 78% voting control of the combined company. No deal was announced. Another put Mosaic on a watchlist, citing phosphate losses and about $500 million in annual cash burn, and said they did not own the stock.