Big Tech Earnings Week Starts as Musk Warns on AI Funding

Big Tech earnings week starts with the Fed on Wednesday, Musk warning on AI funding, an SK Hynix $12B payout and Brazil crashing on Lula. Key levels in IST.

TLDR

• The busiest week of earnings season starts today. The Fed decides on rates at 11:30 PM IST Wednesday, Alphabet and Microsoft report early Thursday morning IST, and Amazon reports early Friday morning IST.
• Elon Musk said debt markets have almost shut off for AI cloud companies without real revenue outside data centers, even as SpaceX closed $40B of debt to buy GPUs.
• SK Hynix reportedly plans a special dividend of about $12B from its Kioxia stake sale, two days before its Q3 results on Wednesday morning IST.
• On Friday the Dow fell 1.23% to 52,215.16 and the S&P 500 fell 0.52% to 7,623.68, but chips bounced, with Micron up 2.46%.
• Asia is weaker this morning. The Nikkei fell 0.80% and the KOSPI about 1.5%, while Brazil’s market crashed after President Lula won a fourth term.

Market Regime

Markets enter this week with less room for error. Brent crude settled at $116.72 on Friday, a six-month high, and the 10-year Treasury yield ended the week at about 4.999%. Goldman Sachs expects the Fed to hold rates on Wednesday and raise them in December. With oil and bond yields this high, investors want more from company earnings before they pay up for stocks.

The test this week comes from the biggest AI spenders. Last week Meta beat estimates and still fell about 7% because of its AI spending plans, and Bloom Energy fell 11.24% on Friday after a beat and raise. For Microsoft, Alphabet and Amazon, the number that matters most is how much they plan to spend and whether that spending is starting to bring in revenue. A clear payoff could steady the Nasdaq. Higher spending with no matching revenue could extend last week’s tech selloff.

Bullish Factors

• Chips bounced on Friday. The chip index rose 0.44% after Thursday’s rout, with Micron up 2.46%, AMD up 1.74% and Intel up 1.72%.
• Iran strike fears eased. Trump said the US would not strike Iran on Sunday, and US stock futures rose when trading reopened.
• Memory payouts. Bloomberg reports SK Hynix plans to return about 80% of its Kioxia stake gains to shareholders through a special dividend of about $12B.
• Strong guidance going in. Microsoft guided quarterly sales to about $90.4B, above the $89.66B estimate, and Amazon CEO Andy Jassy said AWS capacity is largely sold out for 2027.
• Consumers a little less gloomy. The University of Michigan sentiment index came in at 48.0, above the 46.3 estimate.
• Some strategists see the end of the correction. Morgan Stanley’s Mike Wilson said the stock market correction is in its final innings.

Bearish Factors

• Oil at a six-month high. Brent settled at $116.72 on Friday as US and Iran tension stayed high. The Houthis said they targeted Saudi oil pumping stations.
• Rates near 5%. The 10-year Treasury yield ended Friday near 5%, and Goldman expects a Fed rate hike in December.
• AI funding fears. Musk warned that 200+ neocloud companies could face failures and consolidation. Apollo’s chief economist said AI has delivered almost no payoff outside Big Tech so far.
• Beats are not enough. Meta and Bloom Energy both fell after beating estimates, so a strong headline number may not protect a stock this week.
• Fewer bulls. HSBC cut global equities to neutral from its maximum overweight.

Asian Markets This Morning

• Japan: The Nikkei 225 fell 0.80% to its lowest close since late July, with chip and electronics shares leading the decline.
• Korea: The KOSPI fell about 1.5% and the Kosdaq about 2.8%. Goldman cut its 12-month KOSPI target to 9,000 from 12,000, but still sees over 60% upside after a fall of more than 35% from the June peak.
• China and Hong Kong: The Hang Seng rose about 0.2% and the Shanghai Composite slipped about 0.3%.
• Brazil: Lula won a record fourth term with 51.75% of the vote. Brazil stock ETFs fell between 15% and 20% in overnight and Asian trading, and Petrobras fell about 14%.
• Oil and the yen: Oil opened lower after the weekend passed without a US strike on Iran. The dollar slipped against the yen, from above 157.10 to below 156.75.

What Moved Wall Street Today

Friday ended a rocky week on a split note. Oil and consumer stocks pulled the Dow down 652.82 points, while tech held up better after Thursday’s selloff.

• Indexes: The Dow fell 1.23% to 52,215.16, the S&P 500 fell 0.52% to 7,623.68, the Nasdaq Composite fell 0.21% to 25,955.34 and the Russell 2000 fell 0.29% to 2,775.90. The VIX ended at 19.45.
• Sectors: Energy was the best sector, up 2.60% on higher oil. Consumer staples fell 1.92%, communication services 1.78% and consumer discretionary 1.66%.
• Week: The S&P 500 lost 0.5% and the Nasdaq 0.7% for the week, while the Dow gained 0.4% and the Russell 2000 gained 2%.
• Big Tech: Microsoft rose 0.66% and moved back above Alphabet in market value. Alphabet fell 1.24%, its third straight loss, and Amazon fell 0.95%. Apple touched a record high.
• Others: SpaceX rose 1.89% after closing its $40B GPU debt deal. Bloom Energy fell 11.24% despite a beat and raise.

Assets in Focus

MSFT (Microsoft)

Microsoft rose 0.66% to $524.51 on Friday and is again the third largest stock in the world, back above Alphabet. It reports Q1 results at 3:00 AM IST Thursday, a few hours after the Fed decision. The company guided sales to about $90.4B against the $89.66B estimate, and Azure growth to about 45% in constant currency. Reference points: $521.08 (Thursday’s close) below and $532.95 (Wednesday’s close) above.

GOOGL (Alphabet)

Alphabet fell 1.24% to $320.21 on Friday, its third straight loss. It reports Q3 results at 2:00 AM IST Thursday, and analysts expect about $2.99 a share. Google Cloud now offers an Anthropic-managed option for Claude models, which puts more focus on cloud growth in this print. Whale traders on trade.xyz are about 89% short going in. Reference point: $334.76 (Wednesday’s close) above.

AMZN (Amazon)

Amazon fell 0.95% to $248.00 on Friday. It reports Q3 results at 2:30 AM IST Friday, with sales guidance of $197B to $202B. CEO Andy Jassy said AWS capacity is largely sold out for 2027. The number to watch is capital spending, guided at about $220B for the year. Reference point: $262.37 (Wednesday’s close, before the AI selloff) above.

SKHY (SK Hynix)

SK Hynix reports Q3 at 5:30 AM IST Wednesday, with Samsung following at 6:30 AM IST Thursday. Bloomberg reports the company plans a special dividend of about $12B from its Kioxia stake gains. Analysts in Korea expect operating profit of about 77 trillion won, after estimates drifted lower on a stronger won. SKHY is up 2.18% over 24 hours on trade.xyz and is the most-longed asset among whale traders, at about 74% long. MU, SNDK and SOXL give other ways to follow the memory and chip trade.

SPCX (SpaceX)

SpaceX rose 1.89% to $147.49 on Friday after closing $40B of debt to buy GPUs, with deliveries due by mid-2027. The same weekend, Musk warned that smaller AI cloud companies are losing access to debt markets, which puts the focus on large, cash-rich AI names. About 40% of tracked whale traders hold SPCX, and they are about 56% long. Reference points: $144.75 (Thursday’s close) below and $159.31 (Wednesday’s close) above.

Index Levels to Watch

• S&P 500: Closed at 7,623.68. Thursday’s close of 7,663.43 sits above, and 7,600 is the round number below.
• Nasdaq Composite: Closed at 25,955.34. The 26,000 level and Thursday’s close of 26,008.86 sit just above. NSDQ100 on CoinDCX Global Futures tracks the Nasdaq-100.
• Dow Jones: Closed at 52,215.16. Thursday’s close of 52,867.98 sits above, and 52,000 is the round number below.
• Russell 2000: Closed at 2,775.90, just under Thursday’s close of 2,784.03. Last week’s close of 2,721.37 sits below, after a 2% gain for the week.
• VIX: Ended at 19.45, up from 19.03 on Thursday. The 20 level is the line traders watch for a jump in fear into the Fed and Big Tech results.

Disclaimer

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