#ai-spending

Oracle filed with the SEC on Monday, November 2, to sell $10 billion in common stock and $10 billion in senior notes to help pay for its AI buildout. The plan had been outlined at its investor day the week before, but the shares still fell 8.8%. Oracle has said this $20 billion is all the new capital-market funding it plans for its fiscal 2027 to 2030 investment cycle, leaning instead on vendor financing, customer-provided hardware and prepayments.

On Tuesday, Meta sought to raise $20 billion to $25 billion in a bond sale, about two-thirds in dollars and one-third in euros, according to people familiar with the matter cited by CNBC. The sale came days after S&P Global Ratings revised Meta's AA- outlook to negative, citing its heavy capital spending and negative free cash flow. Meta has said it plans to raise $95 billion in total, including $35 billion in public stock offerings. Its shares rose 2.7% on Tuesday after a losing October.

Alphabet reported third-quarter revenue of $127.58 billion, up 25% but short of the $128.22 billion analysts expected, and adjusted earnings of $2.67 a share against $3.02 expected. CNBC calls it the company's first top-and-bottom-line miss in nearly four years. Free cash flow was negative $9.07 billion, far below the negative $2.70 billion analysts expected, and long-term debt rose to $125.1 billion from $21.6 billion a year earlier.

Search revenue grew 12% to $63.35 billion, missing estimates; Alphabet's business chief said lower monetization in AI Mode was part of the reason. Google Cloud revenue more than doubled to $30.7 billion, ahead of forecasts. Alphabet kept its 2026 capital spending forecast at $195 billion to $205 billion and said spending will rise significantly in 2027.

The shares fell about 9% after hours on October 28 and closed down nearly 13% on October 29, which CNBC reports is the stock's worst day since Google went public in 2004, erasing roughly $500 billion in market value.

On October 26, Microsoft's chief people officer, Amy Coleman, announced a voluntary exit offer for about 60,000 employees, roughly 27% of the global workforce, in the US, UK, Canada and India, the AP reports. Microsoft had about 223,000 full-time employees at the end of June and cut 4,800 jobs in July.

Two days later Microsoft reported fiscal first-quarter revenue up 19% and diluted earnings of $4.92 a share, up 32%. Microsoft Cloud revenue was $63.9 billion, up 30%, and commercial remaining performance obligation rose 73% to $677 billion, according to the company. CNBC reports Azure grew 48% and finance chief Amy Hood guided to 49% to 50% growth next quarter.

Capital expenditures and finance leases were $45.2 billion, below the $50.67 billion analysts expected; Hood said some third-party capacity deliveries were delayed. Free cash flow fell 27% to $18.63 billion but stayed positive. The stock rose 2% to 4% after hours but ended the next day roughly flat.

Amazon reported third-quarter results after the close on October 29: earnings of $1.89 a share on revenue of $201.94 billion, short of the $1.96 and $202.31 billion analysts expected, per LSEG. Shares fell more than 6% in extended trading.

Free cash flow was negative $42.4 billion over the trailing twelve months, the second straight negative quarter, which Amazon attributed mainly to AI-related purchases of property and equipment. Capital expenditures were $77.3 billion in the quarter, well above the $58.7 billion analysts estimated; Amazon kept its 2026 capex forecast at $220 billion, and CEO Andy Jassy said it expects to spend "meaningfully more in 2027."

AWS sales rose 39% to $45.98 billion, beating forecasts, and Jassy said he expects AWS growth above 40% next year. Fourth-quarter revenue guidance of $240 billion to $247 billion had a midpoint below expectations.

The Nasdaq Composite fell 2.6% to 26,008.86 on October 22, its worst session since June, and the S&P 500 lost 1.21%, its worst since July. The Dow ended slightly higher. CNBC and Yahoo Finance tie the drop to renewed worries about AI spending after Meta's results, and to oil.

AMD fell more than 8%, Micron 6% and Nvidia about 4%. Neocloud CoreWeave dropped 10%. Power and equipment names linked to data centers fell hard: GE Vernova and Bloom Energy each lost more than 11% and Vistra more than 10%, CNBC reports.

Investors moved into bonds: the 10-year Treasury yield fell more than 17 basis points to about 4.97%, CNBC reports; Yahoo Finance said it was on track for the biggest one-day drop in more than two years.

Meta reported third-quarter revenue of $64.60 billion, up 26% and above the $63.37 billion analysts expected, and guided fourth-quarter revenue to $73 billion to $76 billion. The stock rose after hours on October 21 but fell almost 7% on October 22.

CNBC reports free cash flow was negative $2.12 billion in the quarter, and Meta raised the floor of its full-year capital spending forecast to $135 billion to $145 billion (from a $130 billion bottom). The spread on Meta's five-year credit default swaps hit an all-time high.

Meta also announced a nonvoting Class C stock, to be distributed to all shareholders as a dividend starting January 2027, which CNBC describes as effectively a 2-for-1 split. Meta says it is meant to keep its "founder-led structure" and help finance growth. The SEC filing says Mark Zuckerberg could leave California if the proposed state wealth tax passes, and that he committed to stay for eight years as part of the new stock plan. Meta's workforce shrank 12% in the quarter to 66,000.

World stocks edged lower on Tuesday as concerns about AI spending weighed on chipmakers, which fell more than 1% on Wall Street; the Dow lost 0.31%, the S&P 500 0.10% and the Nasdaq 0.26%. Traders cited progress by Chinese memory maker CXMT and Broadcom CEO Hock Tan likening some flows into AI to "casino gambling." One portfolio manager said Nvidia and AMD usually trade down before the hyperscalers report because of uncertainty over their capital spending. Earnings season opened with JPMorgan up slightly and Wells Fargo down 2.1%.