Big Tech Earnings This Week Test AI Spending as Stocks Slide

Tech stocks had their worst stretch since June last week, and the next test arrives fast. Big Tech earnings start Wednesday, Oct. 28, when Microsoft and Alphabet report after the close, with Amazon following on Thursday, Oct. 29. Investors want to know one thing: will the money pouring into AI data centers start paying off soon enough to justify the bill?

The selling was sharp. The Nasdaq Composite closed at 26,008.86 last Thursday, down 2.6% and its worst day since June, according to Bitcoin News Digest. Meta fell 6.98% after outlining a 2026 capital spending plan of $135 billion to $145 billion, and AMD dropped 8.1%. Our separate look at Meta's drop covers that stock in detail.

A US gauge of semiconductor stocks sank to a three-month low after two weeks of steep tech losses. Futures on the S&P 500 rose 0.4% and the Nasdaq 100 gained 0.7%, according to a Bloomberg market wrap. That is a relief bounce, not a recovery, and this week's reports will help decide which one it becomes.

Thursday's selloff was partly driven by concerns about AI capital spending and whether infrastructure providers can get financing. The financing side of that worry is covered in our Nvidia and neocloud financing story. The three cloud giants matter more than any single supplier, because their spending guidance sets the pace for much of the industry.

Big Tech earnings dates and what Wall Street expects

Analysts have boiled the week down to two data points: how much these companies are spending on artificial intelligence, and when that spending starts to pay off in a meaningful way. Bloomberg's preview headline put the risk plainly, warning that AI spending fears threaten to swamp Big Tech's strong earnings.

Microsoft's consensus calls for revenue of about $90.6 billion and EPS of roughly $4.71 to $4.73, according to Crypto Briefing. Alphabet's EPS estimates run about $2.94 to $3.03. Revenue forecasts for Alphabet differ across sources, so treat any single revenue figure with caution until the company reports.

The Federal Reserve's rate decision also lands on Wednesday, in the same week. Borrowing costs shape how expensive AI projects look, so investors will read the rate outcome alongside capex guidance. A rate move and a capex raise can hit the same stocks on the same afternoon.

A daily market report from Ed Lane put the problem plainly: strong earnings have not been enough to lift stocks. That is the context for these reports. A beat no longer guarantees a rally, and a higher spending plan can push a stock lower even when revenue grows.

What Microsoft's Azure numbers have to prove

Microsoft guided to Azure growth of 44% to 45% in constant currency for the quarter, and it expects capital spending above $50 billion, according to Yahoo Finance's earnings preview. Those two figures define the bar. Azure has to grow inside that range, and the spending line cannot climb so fast that investors start questioning the return.

Microsoft has been rewarded before for showing results. Its last report led to a rise after 18% revenue growth and a $3.2 billion gain tied to its Anthropic investment, according to PrimeXBT. That history gives the company some room, though not unlimited room. A strong Azure number paired with a steady spending outlook would be the cleanest bull case this week.

A miss would be read differently. If Azure growth lands below the guided range while capex holds above $50 billion, the market would be paying for infrastructure that is not yet producing the growth to match. That is the scenario the sell-off has been pricing.

Alphabet and Amazon: a higher bar and sold-out capacity

Alphabet enters the week under pressure. Its shares fell nearly 6% in the prior week and broke below their 200-day moving average, according to Moomoo Community's market note. Last quarter its revenue beat expectations, yet the stock sank after it raised its capex forecast. For 2026, the expected capex range is $195 billion to $205 billion, so a revenue beat alone will not be enough if the spending outlook rises again.

Amazon offers the clearest demand signal of the three. CEO Andy Jassy said AWS capacity is largely sold out through 2027, with substantial commitments extending into 2028. Those commitments are the bull case, because customers are locking in capacity years ahead. They also mean Amazon must keep building, which is why its expected 2026 capex of about $220 billion draws so much attention.

For cloud customers, a sold-out calendar means less room to add capacity on short notice. Businesses that depend on AWS, Azure or Google Cloud for new projects may face longer waits or tighter pricing if demand keeps outrunning supply. Those are operational questions that the earnings calls may partly answer.

Why Tesla's capex cut is being read two ways

Tesla's move shows how markets are reading capital spending right now. The company cut its 2026 capex guidance to about $20 billion from more than $25 billion. Its third-quarter capex came in at $4.7 billion against a $7.9 billion forecast, and free cash flow reached $1.53 billion, well ahead of an expected burn near $4.92 billion, according to CFO Dive and Seoul Economic Daily.

Some read that cut as a warning sign. GLJ Research's Gordon Johnson asked whether it marked the "end of the AI trade," according to Yahoo Finance. Tesla's CFO said spending would expand in coming years, per Tech Insider. Others see a company-specific adjustment rather than a verdict on the whole cycle.

Elon Musk, Tesla's CEO, wrote in a post on X on Sunday, "As of the past few weeks, debt markets have almost entirely shut off access to money." As TheStreet reported, the remark concerned companies without substantial revenue independent of AI data centers. If lenders tighten for companies that depend on those data centers, the spending story and the credit story become the same story.

Whether this is an AI demand problem or a financing problem remains contested. The hyperscalers have not yet shown stress in their own debt markets, and nobody knows yet whether the neocloud strain will spread to them.

What the sell-off means for your retirement account

Many Americans with 401(k)s and index funds already own a large slice of Big Tech. The largest companies dominate the S&P 500 and the Nasdaq, so a sell-off in those names moves broad index funds too. Communication services fell sharply last week, and Meta and Alphabet carry large weights in that sector. Bitcoin also tracked the tech selloff, falling below $80,000 on Saturday, according to the Bitcoin News Digest.

A few practical steps make sense before the reports land:

• Check your fund's top holdings. If the largest tech companies make up a big share of a fund, decide whether that concentration fits your tolerance for losses.
• Do not trade on the first headline. Stocks can swing sharply after hours, and the capex guidance and management commentary can matter as much as the headline EPS number.
• Read the spending line, not only the earnings line. Track Azure's growth against the 44% to 45% guide, Amazon's AWS commitments, and any change to Alphabet's $195 billion to $205 billion range.

What to watch after the reports

The central open question is whether Microsoft, Alphabet and Amazon raise or hold their 2026 capex outlooks. Results land after this brief's timestamp, so the answer is not yet known. A raise paired with faster cloud growth would support the AI trade, while a raise with slower growth would feed the financing fears that drove Thursday's selloff.

The Fed decision on Wednesday will shape how investors weigh those numbers. Borrowing costs and capex guidance will be read side by side, and a weak reaction to either could extend the two-week slide.

After Amazon reports on Thursday, the next question is whether the spending plans hold through 2027, the year the company says its cloud capacity is largely sold out. The earnings calls will show whether demand is strong enough to keep this trade intact.