Earnings night split the AI trade. Microsoft delivered what investors wanted: Azure grew 48% to $33.2 billion, guidance points to 49-50% growth and free cash flow of $18.6 billion beat estimates by nearly $10 billion. Lower capex came from delayed third-party GPU capacity, not cuts. Alphabet missed for the first time since 2022, and negative free cash flow plus a jump in debt triggered its worst day ever. Amazon reaffirmed $220 billion in capex and Intel fell more than 20% on weak guidance.
My takeaway: the market rewards AI spenders that fund growth from cash flow and punishes those that burn cash or borrow heavily. Demand for compute, advanced chips and HBM memory is not the problem; financing and sentiment are.
Today the Q3 Employment Cost Index (expected 0.8%) and Chicago PMI decide whether the 10-year yield, now near 4.90%, keeps falling. A softer print could cut December hike odds and help tech find a floor. A hot wage number plus Brent near $116 would push yields back toward 5%.
I stay invested in semis, memory and cloud and add slowly on weakness. How do you read Microsoft versus Alphabet after this week?
My eToro profile: https://www.etoro.com/people/rudolfdeleeuw