The clearest number of the week came in low. Microsoft spent $45.2 billion on capital expenditure against its own outlook of more than $50 billion, grew Azure 48% in constant currency against a 44% to 45% guide, and finished the week down just 0.5% at $521.91. Alphabet did the opposite. It held its 2026 capex range at $195 billion to $205 billion, said 2027 would increase significantly, posted negative free cash flow of $9.07 billion where analysts modeled $2.7 billion of positive flow, and fell 12.6% on Thursday. That is roughly $500 billion of market value in a session, the worst day in Alphabet's history.
The indexes stayed calmer than the dispersion underneath them. The S&P 500 closed Friday at 7,580.07, down 0.57% on the week after a 1.82% Friday, its worst session since June. The Nasdaq Composite finished at 25,437.00, down 2.00% on the week and 5.30% for October, its worst month since March 2025. The Dow closed at 51,770.31, down 0.85%, and the equal-weight S&P rose 0.80%.
Scorecard: October 26
Seven rows. Four right, two split, one that cannot be graded honestly.
- Hold at 3.75% to 4.00%, 10-year closing between 4.85% and 5.15%. Right on both, with two dissents for a hike and the 10-year at 4.93%.
- September core PCE at 0.3% or lower. Right on the letter, at 0.3%. The annual rate still rose to 3.1% and headline hit 3.6%, so the bar was too low to be worth much.
- S&P 500 holds 7,575 and reclaims 7,712 by Friday. Split. Support held by 5.07 points, the reclaim arrived Tuesday through Thursday at 7,743.98, and Friday gave it all back.
- Microsoft revenue above $90.6 billion, Alphabet above $128 billion. Split, and the miss was the one that mattered. Microsoft printed $92.3 billion, Alphabet $127.6 billion, its first miss on both lines in nearly four years.
- AWS revenue growth at or above 35%. Right, at 39% on $45.98 billion, the fastest in nearly five years. Amazon fell about 6% after hours anyway.
- CoreWeave five-year CDS back inside 1,100 basis points. It got inside mid-week, to 1,041.4 from 1,148 Monday. No verifiable Friday level exists, so this row gets no grade.
- Brent weekly close below $118 absent a confirmed Hormuz closure. Right by 36 cents, at $117.64 on the expiring December contract, with WTI at $104.12.
The Playbook's first line was right: Microsoft and Alphabet were the real decision of the week, not the Fed. The Nvidia line was wrong for a fourth straight week, at $204.64. Energy worked, and Micron held $850 at $884.74.
The Market Stopped Paying for Capex at Any Growth Rate
Three hyperscalers reported inside 36 hours with three capex postures, and the market ranked them in the order of their restraint. Microsoft's quarter was its cleanest in years: revenue up 19% to $92.3 billion, Microsoft Cloud at $63.9 billion and up 30%, and a December guide of $96.0 billion to $97.1 billion with Azure at 49% to 50%. What held the stock up was the capex underspend. Spending accelerates in the back half of fiscal 2027, a promise about later rather than a bill today.
Alphabet grew revenue 25% and nothing else cooperated. Capex hit $51.4 billion against $24.0 billion a year ago, operating income of $40.58 billion missed a $43.19 billion consensus, and free cash flow went to negative $9.07 billion. Holding the 2026 range while flagging a significant 2027 increase was the worst available answer: no new number, and no claim that cash flow covers it. Amazon landed in between and still lost, growing AWS 39% on $75.9 billion of quarterly cash capex and a 2026 plan near $220 billion against $132 billion last year.
The rotation showed up at the top of the market. Apple closed Friday worth $5.03 trillion against Nvidia's $4.93 trillion, its first closing lead since late July. Capital left the companies building the compute for the one selling the device. Intel fell 28.58% to $65.76, its worst day since 1974, after guiding fourth-quarter revenue below a $17 billion consensus and warning it does not expect positive cash flow this year. SanDisk grew revenue 23% sequentially to $11.0 billion, guided up, announced an eight-for-one split, and fell 13.47%. Beat, raise, split, and lose 13% is not a demand verdict. It is a refusal to pay forward for anything that needs a fab.
Hot Data, Falling Yields, and a $6.3 Billion Hole in Crypto
The macro went the hawkish way and the long end ignored it. Third-quarter GDP grew 3.4% against consensus near 3.1%. Core PCE rose 0.3% on the month and 3.1% on the year. The Fed held with two dissents for a hike, upgraded activity from solid to strong, and declined to signal December, which futures price near 70%. Against all of it the 10-year fell to 4.93%, the 30-year finished flat at 5.31%, and gold dropped about 3.3% Friday to near $3,900 after trading above $4,000 a week earlier. Hot prints, falling yields, falling gold: that is money leaving AI risk for duration, not fleeing inflation.
Crypto broke for a reason of its own. Binance lost about $6.3 billion in the largest exchange hack on record, traced to a compromised laptop, with most funds moving inside 20 minutes. Roughly $3 billion was frozen with partners including Tether and Circle, withdrawals stopped Friday and resumed in phases Sunday, and Binance says it will cover the losses. Bitcoin traded as low as $76,141 and ended the week down about 2.9%, while spot ETFs shed $643.3 million Friday, the largest outflow day since June. The $150,000 call stands, retired only on a weekly close below $55,000.
This Week
- Monday: ISM manufacturing near 54.6, then Apple and Palantir after the close. Memory cost pressure on Apple's margins is the line to read.
- Tuesday: the midterm elections, JOLTS openings, and AMD after the close.
- Wednesday and Thursday: McDonald's and Qualcomm, then the Bank of England and claims.
- Friday: October payrolls, consensus 55,000 to 65,000 with unemployment at 4.2%, against September's 29,000. It is the only print this week that can move the long end.
- Oil: Iran's foreign minister says Qatari mediators cut Tehran's proposal to 48 hours, with Hormuz reopening on day two. Washington has not answered, and Brent traded near $108.50 Monday morning.
Key Levels for the Week
| S&P 500, on a closing basis | Holds 7,500 and reclaims 7,680 by Friday |
| October payrolls, Friday | Between 40,000 and 90,000, unemployment at or below 4.3% |
| Apple Monday | Revenue above $113.4 billion, gross margin at or above 47% |
| AMD Tuesday | Revenue above $13.1 billion, EPS at or above $1.94 |
| Nvidia | Holds $195 on closes |
| 10-year yield, weekly close | Between 4.80% and 5.05% |
| Brent front month, weekly close | Below $108 only on a confirmed Hormuz reopening |
My Take
Three weeks ago the problem was inflation. Two weeks ago it was the price of AI credit. Last week it got simpler and worse for the builders: the market will not pay for capital expenditure at any growth rate. Amazon grew AWS at its fastest pace in five years and fell. SanDisk beat, raised, and split, and lost 13%. Alphabet held its guidance and lost half a trillion dollars. Microsoft spent less than it promised and was the only one left standing.
Playbook: treat Friday's payrolls as the real event rather than Tuesday's midterms, because a December hike priced near 70% is the only thing that moves the long end off 4.93%; prefer restraint to scale among the hyperscalers and keep Microsoft first at $521.91 on an underspent quarter and 48% Azure growth; keep Nvidia at BUY with the $268 target at $204.64 while stating plainly that the rating has cost money four weeks running; hold Micron above $850 on closes and read SanDisk's drop on a beat, a raise, and a split as a valuation reset rather than a pricing one; avoid Intel until it posts a quarter of positive free cash flow; trim energy into Hormuz diplomacy rather than after it, since a 48-hour reopening plan prices faster than a strike does; and leave bitcoin alone, because a $6.3 billion hack is a counterparty question, not a dip.