Alphabet did exactly what I expected on Wednesday: revenue up 24%, Cloud up 82%, and 2026 capex raised to $195 billion to $205 billion. The stock fell 7.7%. Tesla beat on revenue, missed badly on margin, confirmed more than $25 billion of capex, and fell 12%. Intel rose 12% after hours on 85% 18A yields and closed down 8% the next day on foundry losses. Semis are still down roughly 20% for the month. The market has now made its rule completely clear: growth financed by accelerating capex gets sold, no matter how good the growth is.
That rule is the lens for everything this week, and there is a lot of everything: the Fed on Wednesday, Boeing and PayPal tomorrow, Microsoft, Meta, and Robinhood on Wednesday, Amazon and Apple on Thursday, and the first estimate of second-quarter GDP in between.
The Fed: Hold, With Dissents
The June dots had nine of eighteen officials projecting a hike. June CPI then dropped to 3.5% on falling gasoline, which I said at the time bought the Fed time rather than a cut. Since then Brent has gone from $69 to above $100 on the Hormuz attacks before easing back toward $90. That is not a backdrop for a new Chair to sound relaxed.
My expectation is a hold at 3.50% to 3.75% with multiple dissents in favor of a hike, and a statement that explicitly names energy and the Middle East as the reason inflation is not cooperating. That is a hawkish hold. The long end of the curve will not like it, because a Fed that talks tough and does nothing looks like a Fed that is behind. I would not be surprised to see the 10-year through 4.70% by Friday. Long-duration assets, including the stocks reporting this week, have to clear that bar on top of their own numbers.
The Earnings, in Order of Conviction
- Microsoft, Wednesday. This is the one. Down close to 20% this year, roughly 30% off its high, and the only hyperscaler that has not raised equity. If Azure growth comes in at or above 40% and capex guidance is held rather than raised, it is the one megacap that satisfies the market's rule, and the setup for a large move higher is as good as I have seen in this name since I first wrote it up last September.
- Amazon, Thursday. AWS has been accelerating and the retail margin story is intact. The risk is a capex figure north of $200 billion. Second-best setup of the week.
- Meta, Wednesday. The problem child. It ran 15% on the cloud-capacity report in early July, which means expectations are high going into a print where costs, including a large headcount reduction, will be up a lot. Not a name to be long into this print.
- Apple, Thursday. Strong iPhone quarter is likely. The thing I am watching is guidance commentary on memory costs. Apple is the largest buyer of DRAM and NAND on earth, and a memory shortage that is great for Micron is a margin problem for Apple. If Tim Cook says it out loud, that is your confirmation of the memory cycle from the demand side.
- Boeing, Tuesday. I made the case in May. Deliveries have been rising every month, the backlog is a record, and the Hormuz reopening, however fragile, helps Gulf deliveries. A positive free cash flow number would be the turning point.
- PayPal, Tuesday. There is a take-private bid on the table at $60.50 and the board wants more. The quarter matters less than the deal. This is now a merger-arbitrage setup with a decent fundamental floor: the stock was among the most oversold in the index before the bid.
- Robinhood, Wednesday. I wrote in December that the correction was a buying opportunity. Crypto revenue will be down hard given Bitcoin's first half. The offset is prediction markets and equity volumes, and I think the offset is bigger than the market expects.
Levels
What I Am Watching
| Fed decision | Hold, 2 or more hike dissents |
| 10-year yield after the meeting | Above 4.70% would pressure the whole week |
| Azure growth, Microsoft bull case | At or above 40% |
| Microsoft capex guide, what the rule requires | Held, not raised |
| Amazon 2026 capex, danger level | Above $220B |
| Boeing free cash flow | Positive |
| Second-quarter GDP, first estimate | Around 1.5% to 2%, weighed by imports |
My Take
The market has decided that accelerating capex is a sin and growth without it is a virtue. That rule punished Alphabet and Tesla last week and will sort this week's reports the same way. A hawkish Fed hold on Wednesday raises the bar for everyone.
Playbook: highest conviction in Microsoft into Wednesday; constructive on Amazon, Boeing, PayPal, and Robinhood; avoid Meta and Apple into their prints.