Earnings Euphoria and AI Ambitions: A Market Halloween Treat
Welcome, listeners, to another exciting dive into the world of markets and tech. Picture this: it’s Halloween week, markets are dressed up in their finest rally costumes, and over 150 companies have just dropped their earnings reports like candy into our trick-or-treat bags. The anxiety that haunted investors at the start of earnings season has vanished like a ghost in the night, with markets now boasting double-digit gains for the year. So, let’s carve into this pumpkin of news, from tech giants to struggling sectors, and see what’s sweet and what’s scary.
First, let’s talk about the big tech trio—Meta, Google, and Microsoft—who reported on Wednesday night and collectively reminded us that the AI story isn’t just a passing fad; it’s the blockbuster of our era. All three smashed revenue and earnings expectations, with numbers that could make even the most skeptical investor sit up. Microsoft alone reported a staggering $77.7 billion in revenue against a consensus of $75.4 billion, with cloud growth at an impressive 39%. Google and Meta weren’t far behind, flexing their financial muscles too. But here’s the kicker: despite these objectively stellar results, the after-hours market reactions were a mixed bag. Google soared nearly 7%, while Meta dipped 7% and Microsoft fell 4%. Why the disconnect? Well, I think it’s less about one-time tax hits, as some have suggested, and more about the sheer weight of their AI ambitions. These companies are pouring billions into capital expenditures—Meta at $70 billion, Microsoft at $80 billion, and Google over $90 billion for 2025. For Google and Microsoft, with their massive cloud businesses, these investments are already generating revenue. Meta, however, lacks a cloud arm, meaning its AI spending is purely speculative for now, and its balance sheet shows the strain—cash reserves dropped 43% this year. Investors might be signaling that Meta’s road to returns on this AI gamble could be bumpier than its peers’. It’s a reminder that even in a tech boom, not all giants carry the same armor.
Speaking of giants, let’s not forget Amazon and Apple, who also reported this week. Amazon, the underdog of the Magnificent Seven with just a 1% gain year-to-date before this report, finally got its moment in the spotlight. With earnings per share at $1.97 against an expected $1.57 and strong beats across web services and advertising, the stock jumped over 10% after hours. Apple, meanwhile, has staged a remarkable comeback from double-digit losses earlier this year to an 11% gain, fueled by iPhone 17 sales beating expectations and a lucrative $20 billion annual deal with Google that survived antitrust scrutiny. Their earnings beat estimates too, with a promising 10-12% revenue growth forecast for the next quarter. Yet, the market still seems to be whispering, “Where’s your AI strategy, Apple?” That’s the question that could define their next chapter.
Beyond tech, the market’s broader mood got a boost from a potential U.S.-China trade truce early in the week, sending indices to all-time highs on Monday. But by Thursday, when the deal revealed itself as just a one-year ceasefire, the excitement cooled. Add to that the Federal Reserve’s 25 basis point rate cut—its second this year—and Fed Chair Powell’s cautious hint that a third cut might not come in six weeks, and you’ve got a market that’s a little jittery. Why? Because cheap money fuels stock rallies, and rate cuts signal economic expansion—two things Wall Street loves. When that’s in doubt, nerves creep in.
Not every sector got a Halloween treat, though. Take Chipotle, once the darling of restaurant stocks, now looking more like a haunted house. Their revenue missed expectations, same-store sales forecasts were slashed to negative for 2025, and they’re seeing fewer customers across all income levels. With food inflation biting and no plans to raise prices in step, margins are under threat, and the stock tanked 15% on Thursday, down 45% for the year. It’s a brutal lesson: the market doesn’t forgive growth stories that lose their spark. Similarly, in payments, Fiserv—a former heavyweight—reported dismal numbers, missed every metric, and saw management upheaval as they admitted to masking deeper issues. Their stock plummeted 40% in a single day, a stark contrast to Visa’s steady 9% payment volume growth.
Then there’s the AI ripple effect, which isn’t all rosy. Amazon announced layoffs of 14,000 corporate workers as it ramps up AI investments—a sobering reminder that this tech revolution comes with human costs. Meanwhile, partnerships and deals in the AI space are sending stocks soaring on mere announcements. PayPal, Nvidia, Qualcomm, and others saw gains from tie-ups with players like ChatGPT and Saudi AI startups, though some deals, like Qualcomm’s, might be more hype than substance. It’s a gold rush mentality, and right now, any whiff of AI involvement is enough to spark joy in the markets.
Zooming out, the U.S. economy’s dynamism shines through with Nvidia hitting a $5 trillion market cap, and Apple and Microsoft crossing $4 trillion—numbers that dwarf Europe’s largest stock, which doesn’t even reach $500 billion. It’s a tale of two continents, one thriving on innovation, the other struggling to keep pace. But as we revel in these highs, let’s not ignore the shadows. Sectors like homebuilding, with D.R. Horton reporting declining revenue and earnings, and residential solar, with Enphase cratering on fading tax incentives, remind us that not everyone’s invited to the party.
So, what does all this mean for you, dear listener? It’s a market of extremes—unprecedented tech-driven gains juxtaposed with stark declines in once-hot sectors. AI is the story of the decade, reshaping fortunes and workforces alike, but it’s not a guaranteed win for every player. As we head into November, keep an eye on how these tech giants balance their massive bets on AI with sustainable returns, and watch for whether the Fed’s caution on rates cools the broader rally. For now, the market’s handing out more treats than tricks, but Halloween reminds us: there’s always a scare around the corner. Stay tuned, and let’s keep navigating this wild ride together.