Two companies reported almost the same cloud growth this week, and the market treated them like opposites. Microsoft rose on Azure, Alphabet suffered its worst day since its 2004 listing, and the difference came down to one number: free cash flow. That's why we built Winvesta Crisps, to cut through the noise and tell you what actually moved markets and why. 60,000+ investors from across India are already in. What about you?
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Big Tech's earnings week turned into a single test: show that the AI spending is paying for itself, or pay the price. Alphabet failed it and lost roughly $500 billion in market value in one session, Microsoft passed it and rose, and Amazon was marked down as much as 10% after hours on Thursday for burning cash. All of this landed on top of a Fed that held rates but saw two officials vote for a hike, and an inflation print that kept moving the wrong way.
📊 Market recap
Monday and Tuesday were the calm before the earnings flood. The S&P 500 rose 0.70% on Monday to 7,676.77 and added another 0.60% on Tuesday to 7,722.60, while the Nasdaq Composite gained 0.82% and then 1.18% to close Tuesday at 26,477.81, per Tapeboard's daily recaps. The VIX eased from the low-18s to around 17.5 over the two sessions. The one big casualty was Boeing, which fell close to 11% on Tuesday to around $168 after its Q3 results showed bigger-than-expected losses in commercial jets and a cut to its delivery target, per XTB and 24/7 Wall St, one of the stock's worst days on record.
Wednesday belonged to the Fed. The Federal Open Market Committee held its target range at 3.75% to 4.00% in a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack both voting for a quarter-point hike, per CNBC and CNN. Chair Kevin Warsh said politics played no role ahead of next week's midterm elections. Stocks shrugged and edged higher: the S&P 500 added 0.28% to 7,743.98, the Nasdaq gained 0.27% and the Dow rose 0.19% to the 52,400s, per Cappnotes. The ten-year Treasury yield, by contrast, climbed about 5 basis points to just above 5.0%, and CME FedWatch pricing for a December hike jumped to the low-to-mid 80s in percentage terms, per Yahoo Finance. Vertiv was the session's standout large cap, up about 16.5% after third-quarter sales rose 61% and its orders more than doubled.
Then the earnings landed after Wednesday's bell. Microsoft reported revenue of $92.3 billion, up 19%, with Azure growing 48%, and rose in late trading. Alphabet reported Google Cloud revenue more than doubling, but Search growth slowed to 12% from 17% and free cash flow turned negative under the weight of AI spending, per StockTitan and Yahoo Finance. Shares fell around 10% after hours.
Thursday was the reckoning. Alphabet closed down about 12.6%, its worst post-earnings reaction since listing in 2004, erasing roughly $500 billion in market value, per Yahoo Finance. Microsoft finished up roughly 2 to 3%, and Meta gained 2 to 3% midday. A September PCE print showing headline inflation at 3.6% year on year, up from 3.4%, and core at 3.1%, up from 3.0%, added pressure early, even though both matched forecasts. Q3 GDP came in at a strong 3.4% annualised pace. The Nasdaq fell about 1.4%, ending a three-day winning run, while the S&P 500 slipped about 0.3% to the low 7,700s and the Dow lost about 0.25% to the low 52,300s. Caterpillar fell as much as 12% intraday on a soft Q4 sales outlook, ServiceNow dropped about 25% on bookings worries, and Fortinet lost around 21% after cutting its service revenue forecast.