Daily Market Brief — Thu, Oct 29, 2026

Thursday, Oct 29, 2026 · FT, WSJ, prices

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Article Takeaways

Alphabet's capex bill finally hit the stock: shares fell about 13% and free cash flow went negative. Q3 revenue rose 25% to $127.6B, slightly below estimates; free cash flow was –$9.1B, only the second negative quarter since the 2004 IPO.

• Search revenue grew 12% to $63.4B vs $64.9B expected, slowing from 17% in Q2 and 19% in Q1. Management admits AI Mode answers earn less than classic search ads.
• Capex was ~$51.3B, up from $44.9B in Q2. Full-year guide of up to $205B implies up to $73.1B in Q4; future commitments top $1tn. Spending rises significantly again in 2027.
• Cloud doubled to $30.7B (+103%), partly on capacity sold to Anthropic. Anthropic's S-1 shows ~$114.5B committed to Google compute through 2033.
• Net income fell 25% to $26.2B vs $37.3B expected, including an $8.7B loss on equity stakes (SpaceX). The $5.2B EU fine payment is inside the cash-flow figure.
• Bullish: TPU, memory and data-center suppliers, since spending isn't being cut. Bearish: search-ad economics and "capex at any cost" stocks (inference). (FT, WSJ)

Microsoft spent less than expected, but only because data centers arrived late. Fiscal Q1 capex $45.2B vs $51.7B expected; CFO says delayed third-party capacity comes online in the second half.

• Revenue +19% to $92.3B; Azure, disclosed for the first time, $33.2B (+48%). Net income +32% to $36.6B; FCF $18.6B, above forecasts.
• Capex will accelerate in fiscal H2, mainly because memory costs are rising. Calendar-2026 data-center plan: $170B.
• The catch: neocloud execution. Microsoft pulled out of an Nscale lease over power, earlier exited CoreWeave contracts, and Nebius's 300MW New Jersey site is late. OpenAI is 11% of revenue.
• Buyouts offered to up to 60,000 staff; headcount −2% y/y. (FT)

Samsung's chip profit jumped 15-fold, but the stock fell up to 6% because it held back on payouts. Chip operating profit ₩106.5tn ($79.7bn) in Q3, still below estimates; net profit ₩75.1tn ($56.1bn).

• Only a ₩30tn ($22bn) Q3 dividend; full return plan deferred to late January. SK Hynix announced ₩100tn ($75bn) the day before and rose 3.4%.
• 2026 spending raised ~60% to ₩84.4tn ($63bn). It sees AI capex at a "historic level" in 2027, with demand far above supply.
• Long-term deals with 10 customers, 10 more in talks; contracts to cover up to 70% of capacity by 2030.
• Both trade at 3–4x forward earnings: investors still price memory as cyclical. The pair is about half the Kospi. (FT)

Apple is now the loser in the memory squeeze. TechInsights says AI demand pushed NAND prices up about 5x in a year; flash went from ~5¢/GB at the 2023 low to over 30¢/GB.

• Hyperscalers now buy twice Apple's flash volume; two years ago Apple bought nearly twice theirs. Meta, Microsoft and Amazon signed higher-priced long-term Kioxia deals.
• Apple is expected to spend ~$25B on flash this year for volume that cost ~$6B in 2025. Gross profit on the 256GB→512GB iPhone Pro step fell from $185 to $134.
• iPhone prices up 13% on average this fall, even on older models.
• Bullish: Kioxia, Sandisk, Micron, SK Hynix, Samsung. Bearish: Apple hardware margins and upgrade demand. (WSJ)

The Fed held but two officials wanted a hike, and markets now expect one in December. Target stays at 3.75–4.00% on a 10–2 vote; Cook and Hammack dissented for +25bp.

• Headline PCE is 3.4%. Warsh said price stability hasn't been reached and the Fed won't tolerate inflation in the 2s.
• From 2027 the FOMC votes at only 7 of 8 meetings (6 in 2028), ending a practice from 1981.
• 2-year yield −4bp to 4.7%; December hike odds 85% (CME, per FT), up from 78%.
• Bearish for long-duration tech and rate-sensitive sectors; banks gain on net interest margin (inference). (FT)

Oil is above $100 even though Gulf exports doubled, because traders are pricing a new war. Goldman puts the risk premium at ~$27/bbl; JPMorgan's fair value for Brent is $94.

• The US reportedly told Gulf states to prepare for a short campaign against Iran after next week's midterms. Shipping attacks near Hormuz hit a record this month.
• Gulf exports topped 24M b/d in the week to Oct 18, then fell to at least 15.7M b/d. Iran threatened Sinokor, which carried 20%+ of Hormuz tanker traffic, from Nov 1.
• Onshore inventories are near their lowest since at least 2016; US gasoline $4.25/gal.
• Upside risk to oil, inflation and rates; good for producers and tanker owners, bad for airlines and refiners (inference). (WSJ)

Europe's oil majors are handing the war windfall to shareholders. Shell raised its quarterly buyback from $3bn to $5bn on $10.8bn of adjusted earnings, its second-best quarter ever.

• Shell's refining margin hit a record $42/bbl (from $24) on a diesel shortage. TotalEnergies' profit more than doubled to $9.1bn; buybacks to $2.5bn a quarter. Repsol adjusted income +260%.
• The catch: payouts depend on the war premium lasting, and an Iranian missile damaged Shell's Pearl GTL plant in Qatar. (FT)

DoorDash will buy Instacart for $17bn. $65 a share, a ~26% premium to the pre-rumour price; ~75% cash (JPMorgan bridge loan), ~25% stock.

• Adds Instacart's grocery relationships to DoorDash's own fulfilment and DashMart stores.
• The catch: antitrust in a narrow grocery-delivery market, grocers that could build their own service, and AI shopping agents from Meta and OpenAI. (FT)

The Through-Line

Big Tech is not cutting AI spending: Alphabet guides up to $205B, Microsoft's shortfall is a delivery delay, and Samsung says 2027 capex will be historic. What changed is who pays. Memory buyers (Apple, hyperscalers) eat the price rises, shareholders absorb negative free cash flow, and a Fed leaning toward a December hike makes that cash burn more expensive (inference).

• Fed target (upper) 4.00% Oct 29, 2026
• 2-year 4.61% Oct 29, 2026

3.0%3.5%4.0%4.5%5.0%

Jan ’26AprJulOct

Source: Federal Reserve Board, via FRED; Federal Reserve Board (H.15), via FRED. Chart: Michael Wang.

Numbers Worth Remembering

• Alphabet Q3 FCF –$9.1B; capex ~$51.3B; 2026 guide up to $205B; commitments >$1tn.
• Alphabet search +12% (from 19% in Q1); Cloud +103% to $30.7B.
• Anthropic committed ~$114.5B to Google compute, Apr 2026–Jul 2033.
• Microsoft Azure $33.2B, +48%; capex $45.2B vs $51.7B expected; 2026 data-center plan $170B.
• Samsung chip operating profit ₩106.5tn ($79.7bn); 2026 spending +~60% to ₩84.4tn.
• Long-term contracts to cover up to 70% of Samsung's capacity by 2030.
• NAND prices ~5x in a year; Apple flash bill ~$25B vs ~$6B in 2025.
• H100 index $2.96/hr: −17.09% d/d, −6.03% w/w; Tuesday's spike fully reversed.
• Fed 3.75–4.00%, 10–2 vote; December hike odds ~85%.
• Goldman: ~$27/bbl war risk premium in oil; JPMorgan fair value $94 Brent.
• US Q3 GDP 3.4% annualized vs 3.2% expected.
• DoorDash–Instacart $17bn at $65/share.

• Brent spot $123.10 Oct 27, 2026
• WTI spot $101.91 Oct 14, 2026

$50$75$100$125$150

Jan ’26AprJulOct

Source: U.S. Energy Information Administration, via FRED. Chart: Michael Wang. EIA spot price. Futures prices quoted in the news can differ, especially when markets are volatile.

Top Takeaways

1. Alphabet posted –$9.1B of free cash flow as capex rose to ~$51B a quarter and search growth slowed to 12%, so the stock lost roughly $500bn of value. The market is now punishing AI spending that isn't matched by cash, and AI Mode is cannibalizing higher-margin search ads while Cloud doubles. (GOOGL −13% early Thu, FT)
2. Microsoft's capex came in $6.5B below forecast because third-party data centers were late, not because it cut plans, and it says memory prices will push spending up in H2. Azure grew 48% and FCF held at $18.6B, which is the contrast investors are rewarding; the risk sits with neoclouds that miss delivery dates. (MSFT +4% Wed, +1% early Thu)
3. Samsung's chip profit rose 15-fold to $79.7bn and it raised 2026 spending ~60%, but it deferred its shareholder-return plan while SK Hynix announced $75bn. With contracts to cover up to 70% of capacity by 2030, memory is becoming less cyclical, yet both trade at 3–4x earnings, so payouts are what moves the stocks now. (005930.KS down as much as 6% Thu; 000660.KS +3.4%)
4. NAND prices are up about 5x in a year as hyperscalers outbid Apple, raising Apple's flash bill to ~$25B from ~$6B. Long-term supply deals at higher prices give Kioxia and peers margin protection, while Apple has had to raise iPhone prices 13% to defend margin. (AAPL −0.94%)
5. The H100 rental index fell 17.09% in one print to $2.96/hr, erasing Tuesday's jump to $3.57. One-day spikes in this index aren't reliable signals of tight supply; the 1-month trend (+8%) is the better read (inference). (Ornn H100 index; no single ticker)
6. The Fed held at 3.75–4.00% with two dissents for a hike, and futures now price ~85% odds of a December increase as PCE inflation runs at 3.4% and Q3 GDP grew 3.4%. Strong growth plus energy-driven inflation keeps the 10-year near 5%, which raises the cost of funding AI build-outs. (2-year yield −4bp to 4.7%)
7. Brent stays above $100 despite Gulf exports doubling since April because Goldman estimates a ~$27/bbl premium for a renewed Iran campaign after the midterms. Low onshore inventories mean any new disruption hits prices fast, feeding inflation and Fed hike odds. (Brent Dec +1.26% Wed to $115.32)
8. Shell lifted its quarterly buyback to $5bn and TotalEnergies to $2.5bn after record refining margins on a diesel shortage. Refiners with integrated supply capture the war premium, but payouts depend on the conflict lasting. (SHEL +3%, TTE −4% Thu)
9. DoorDash agreed to buy Instacart for $17bn, 75% in cash via a JPMorgan bridge loan, to own the grocery relationships it lacks. Consolidation gives delivery platforms pricing power, which is exactly what antitrust reviewers will test. (DASH up as much as 10% premarket; CART −2.5% premarket)

Meaningful Percentage Moves

• H100 index −17.09% d/d, −6.03% w/w to $2.96/hr: high. Tuesday's spike was not sustained; 1M still +8.03%, so compute pricing is firm but not breaking out.
• NAND prices ~5x y/y (TechInsights); flash >30¢/GB vs ~5¢ at the 2023 low: high. Supports memory margins at Micron, SK Hynix, Samsung and Kioxia.
• Samsung 2026 spending +~60% to ₩84.4tn; LTAs to cover up to 70% of capacity by 2030: high. More supply coming, but contracted, which reduces glut risk (inference).
• Alphabet capex +14% q/q to ~$51.3B; Microsoft capex 12.6% below forecast on delays: moderate. Demand intact, timing pushed into 2027.
• DDR5 16Gb eTT spot +3.12% w/w, up 9 sessions in a row: low to moderate. Current-gen DRAM still drifting up.
• DDR5 RDIMM 32GB −0.92% w/w; DDR4 16Gb eTT −1.26% w/w; 512Gb TLC wafer −1.28% w/w (Oct 19 print): low. Server modules and NAND spot flat to soft.
• TrendForce posted its 4Q26 PC-client SSD contract update, but the figures aren't public yet; no guidance change counted.

Conflicts: Alphabet's drop: ~10% after hours (WSJ), −8.5% to −10% and ~$400B lost (other reports), vs −13% and ~$500bn in early Thursday trading (FT). Q3 capex $51.3B (FT) vs $51.4B (WSJ). Brent: ~$111 front month early Thursday (WSJ) vs $115.32 December settle Wednesday and ~$114 Thursday (price sources). Kospi: down as much as 3% (FT) vs −1.2% to −2.8% (other reports).

Market close (Wed) and today

S&P 500 7,743.98 (+0.28%), Nasdaq 26,549.85 (+0.27%), Dow 52,475.10 (+0.19%), Russell 2000 2,830.51 (+0.41%). 10-year ~5.03–5.04%, WTI $102.78 (+2.88%), Brent $115.32 (+1.26%), dollar index 102.16. Thursday: Nasdaq 100 futures −1.2% on Alphabet; Q3 GDP 3.4% vs 3.2% expected. ECB decision ~9:15 am ET (hold at 2.50% expected). Amazon, Intel and SanDisk report after the close.

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