Key Takeaways CLS' Q3 earnings beat estimates by 9.3%, while revenues surged 82.5% on strong AI infrastructure demand.CLS raised its 2026 revenue outlook to $21B and targets $40B in 2027, implying approximately 90% growth.Celestica plans $1.5B-$2B in 2027 capital spending while cutting its 2026 free cash flow outlook to $460M.
Celestica Inc. (CLS - Free Report) turned its third-quarter earnings beat into a forward-looking growth event by raising its 2026 outlook and setting ambitious targets for 2027. The company is scaling rapidly as AI infrastructure spending lifts demand for networking, compute and storage products.
The opportunity is substantial, but so are the execution demands. Investors must weigh accelerating customer demand against heavier capital spending, rising inventories and the risks of building capacity around aggressive growth forecasts.
CLS Q3 Beat Shows AI Infrastructure Demand AcceleratingCelestica reported third-quarter 2026 adjusted earnings of $3.30 per share, topping the Zacks Consensus Estimate of $3.02 by 9.3%. Revenues rose 82.5% year over year to $5.83 billion and surpassed the consensus mark of $5.50 billion by 6%.
Connectivity & Cloud Solutions revenues increased 102% year over year to $4.87 billion. Within the segment, Compute & Storage revenues jumped 242%, while Networking revenues increased 68%, reflecting heavy investment in AI and data-center infrastructure.
The same spending cycle is attracting investment across the manufacturing ecosystem. Jabil Inc. (JBL - Free Report) said fiscal 2026 growth benefited from AI infrastructure demand and brought additional capacity online. Flex Ltd. (FLEX - Free Report) is expanding its Cloud and Power Infrastructure capabilities, including power-conversion technology aimed at AI data centers.
Celestica Raises 2026 Revenue and Earnings GuidanceManagement increased its 2026 revenue outlook to $21 billion from $20.5 billion after the stronger third-quarter performance and expected demand improvement in the fourth quarter. Adjusted earnings guidance rose to $11.55 per share from $11.30.
Celestica kept its 2026 adjusted operating margin outlook at 8.4%. Holding that profitability target while lifting the revenue forecast suggests management expects the business to absorb higher volumes without giving up the margin progress achieved during the year.
CLS Sets a $40 Billion Revenue Goal for 2027Celestica’s initial 2027 outlook calls for $40 billion in revenues, adjusted earnings of $21.50 per share and a 9% adjusted operating margin. The revenue target implies approximately 90% growth from the company’s updated 2026 outlook.
Management expects demand from hyperscalers and AI infrastructure customers to remain strong and said 2028 customer demand forecasts are meaningfully above the 2027 revenue outlook. That visibility supports the scale of the planned expansion, but it also raises the importance of converting customer forecasts into timely deployments.
Celestica’s Expansion Plan Raises Execution DemandsThe 2027 plan requires substantial investment. Celestica expects capital expenditures of $1.5 billion to $2 billion next year as it adds capacity to support projected multi-year demand.
Working-capital needs are already rising. Inventory reached $4.51 billion at Sept. 30, 2026, up from $2.19 billion at year-end 2025. Celestica also reduced its 2026 free cash flow outlook to $460 million from $600 million, primarily because of targeted working-capital investments for 2027 growth. Any change in deployment schedules or customer demand could therefore affect cash generation and capacity utilization.
CLS Signals Reinforce the Growth CaseThe latest outlook strengthens the growth narrative, but the investment case still depends on execution. Celestica must deliver a large capacity ramp while protecting margins and translating higher earnings into cash flow.
CLS currently carries a Zacks Rank #2 (Buy) and a VGM Score of A. Its Growth Score of A and Momentum Score of A support a favorable growth and earnings-revision profile, while the Value Score of C keeps valuation discipline relevant. The combination favors the stock’s growth and momentum characteristics, though the scale of the 2027 ramp leaves little room for operational slippage. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Space Exploration Technologies (SPCX -0.83%) entered the stock market with a bang. The Elon Musk-led space and artificial intelligence (AI) company made its debut earlier this year with the largest initial public offering (IPO) in history, and now sports a market cap of $2 trillion. That is the seventh-largest in the world.
Investors are bullish on SpaceX's growth prospects in AI and space connectivity. What could a $2,000 investment in SpaceX be worth in 10 years' time? When you look at the numbers, a lot is riding on future growth.
SPCX Space Exploration Technologies$144.02-$1.21 (-0.83%)
NASDAQ · As of 1:40 PM ET 10/29/26
Large AI and space investments As Musk is wont to do, SpaceX is trying to tackle many growing industries at once. This includes AI through the xAI business (also owned by Musk) that was acquired before the IPO. SpaceX poured $16.5 billion into AI capital expenditures (capex) last quarter, more than its entire quarterly revenue. (Note that the company calls that segment Super Intelligence.) Management expects a roughly twofold increase in consolidated capex this quarter, resulting in up to $40 billion spent in a single three-month period.
SpaceX is making these large capital investments due to the apparently insatiable demand for data centers among AI companies. Revenue from SpaceX's AI infrastructure division grew by more than 10x last quarter to $7 billion, with further aggressive growth expected this quarter.
It is also growing quickly in space-based connectivity with Starlink satellite internet. Connectivity revenue was $5.25 billion last quarter, up from $3.1 billion in the same quarter a year ago. As more Starlink satellites launch into orbit, Starlink revenue should continue to compound.
Image source: Getty Images.
The bull case assumes aggressive growth While the business is growing quickly, a SpaceX bull case requires very optimistic growth assumptions over the coming years. Musk believes the company's annual recurring revenue (ARR) could reach $500 billion or more by the end of 2027, translating to $125 billion in Q4 2027 revenue.
In the third quarter, revenue was $14.6 billion across all of SpaceX. So getting to $125 billion from now would require close to 10x growth in revenue, which does not seem realistic. But, if SpaceX can become a winning neocloud provider of cloud services for AI, it could reach $1 trillion in revenue sometime in the next 10 years. That's still a highly optimistic prediction, but more realistic than Musk's claim.
Where could SpaceX be trading in 10 years? Now, $1 trillion in revenue would be quite nice for SpaceX, and could lead to $100 billion in operating earnings if margins across the entire business reach 10%. As a reseller of compute, it may only be able to obtain this level of profit margins in a normalized environment. There is much uncertainty over how profitable these AI investments will be, since SpaceX is spending monumental amounts of money on data centers that need customers in order to get a return on the upfront investment.
Now, $100 billion in earnings power versus a current market cap of $2 trillion is a ratio of 20. That's not exactly dirt cheap when making forward assumptions over the next 10 years. For that reason, I think an investment in SpaceX would not do very well at today's prices. I think $2,000 invested in SpaceX will be worth around $2,000 -- or even lower -- 10 years from now.
Gold (XAU/USD) dives over 1% on Thursday after a tranche of US economic data cemented the case for another rate hike by the Federal Reserve (Fed) at the December 9 meeting. At the time of writing, XAU/USD trades at $4,019 after reaching a high of $4,069.
Apple (AAPL +1.71%) has finally done something it resisted for years -- put a touchscreen on a MacBook.
The company unveiled its new MacBook Pro with a PROLED XDR display on Wednesday, with the 14-inch model starting at $2,899 and the 16-inch version costing $3,399. That's a hefty price tag for a laptop, particularly when Apple's new M6 MacBook Pro starts at $1,999.
But there's another number investors should pay attention to: $400.
That's the premium Apple is charging for its touchscreen MacBook Pro compared to an existing model with the same processor. And with Apple preparing to report earnings next week, the new laptop offers an interesting look at how the company is managing rising costs without alienating its customers.
Image source: Getty Images.
Apple isn't abandoning its lower-priced MacsThe important thing about Apple's new MacBook Pro is what the company didn't do.
Apple isn't discontinuing its existing MacBook Pro lineup. It's not forcing customers to pay more money for a touchscreen if they don't want it. The 14-inch MacBook Pro with the M5 Pro chip and mini-LED display remains available for $2,499, while the 16-inch version costs $2,999. That makes the touchscreen premium $400, representing a 16% increase for the smaller laptop and about 13% for the larger model.
And there are plenty of cheaper options. Apple's lineup includes the M6 MacBook Pro at $1,999, the MacBook Air at $1,299, and the entry-level MacBook Neo at $699.
That's an important distinction. Apple isn't raising the price of admission to its Mac lineup. It's giving customers another reason to spend more money.
The new PROLED XDR display uses tandem OLED technology, offering improved brightness and contrast alongside touchscreen capabilities. That could appeal to graphic designers, photographers, or other creative professionals willing to pay a premium for a premium product. For everyone else? There's still a perfectly good MacBook available without the premium.
AAPL Apple$349.72+$5.89 (+1.71%)
NASDAQ · As of 1:35 PM ET 10/29/26
Apple's pricing strategy faces a bigger challengeApple's timing is interesting because the company has been dealing with rising component costs, particularly memory chips.
Demand from artificial intelligence data centers has driven up memory prices, making computers and other electronic devices more expensive to manufacture. Apple has already increased prices on some Macs and iPads this year.
Rather than raising prices across its entire lineup again, Apple appears to be taking a more selective approach. The new touchscreen MacBook Pro uses the same M5 Pro and M5 Max processors found in existing models. Customers aren't paying for a faster chip or substantially longer battery life. They're paying for an improved display and a different way to interact with their computers.
That could be an effective strategy for protecting profit margins, particularly if Apple's most demanding customers are willing to pay for premium features.
But there's a catch. The broader PC market has been struggling. IDC estimates that global PC shipments declined 20% in the third quarter, with Apple down 11%. And touchscreen laptops aren't necessarily commanding premium prices across the industry. Only about 17% of notebooks shipped this year have touchscreens, and those machines sell for slightly less than traditional laptops on average.
Apple is betting that its professional customers will see enough value in the new display to justify spending another $400.
Apple's earnings report could tell investors much moreApple is expected to report fiscal fourth-quarter earnings on Nov. 2, just four days before its touchscreen MacBook Pro begins reaching customers.
Mac revenue will be worth watching. Mac computers generated $10.35 billion in sales for the company's fiscal third quarter, up 29% from a year ago. CEO Tim Cook credited the MacBook Neo for helping drive that growth, while strong MacBook Pro sales also contributed.
But Macs accounted for less than 10% of Apple's $109.4 billion in quarterly revenue. Even a successful touchscreen MacBook Pro won't dramatically change Apple's financial results on its own.
Gross margin could be more important. Apple's chief financial officer previously indicated that higher memory costs accounted for more than the company's entire sequential decline in gross margin during the fiscal third quarter.
Is Apple's touchscreen MacBook Pro good news for investors?I don't see the new MacBook Pro becoming Apple's next blockbuster product -- the company's iPhone business will continue to reign supreme. But that's fine. At nearly $3,000, the touchscreen MacBook isn't designed for the mass market.
But it does allow Apple to test demand for premium touchscreen technology without risking sales across its broader Mac lineup. If professional customers embrace the new model, Apple gets additional revenue from buyers willing to spend more. If they don't, customers still have plenty of alternatives.
The bigger issue is whether Apple can maintain its pricing power while component costs remain elevated. When Apple reports on Nov. 2, investors should pay attention to what Cook and his team say about component prices, demand for higher-priced products, and whether Apple expects additional pressure on profitability.
Because at the end of the day, Apple's ability to defend its profit margins matters far more than whether its newest laptop has a touchscreen.
Meta took down its ad touting Muse's ability to 'see who unfollowed you' on Instagram. Very interesting…
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Senior Correspondent covering technology and culture
Meta's Muse AI agent can track who unfollowed you on Instagram. I wonder how Instagram feels about that?
Smith Collection/Gado/Getty Images
Muse, the AI agent from Meta, can do many wonderful and useful things. It can help organize your inbox, book travel plans for you, and buy you lunch.
But one thing that Meta has decided it shouldn't brag about is that it can track who unfollowed you on Instagram.
About a week ago, Rachel Karten, who writes the excellent marketing newsletter Link in Bio, noticed a strange ad on Instagram. The ad encouraged people to download Muse, with an image of the fuzzy mascot holding up red and green Tinder-esque signs, suggesting you could "See who unfollowed you each week."
Finding out who unfollowed you on Instagram is something people have wanted to know since the app first launched. But Instagram — for good reasons — has avoided making this a feature on its own app.
I reached out to Meta to ask about this seeming clash, and a Meta spokesperson confirmed to Business Insider that the ad had been removed and is no longer active in the Meta ad library.
Instagram doesn't want you to know your unfollowsHere's the tension: Instagram knows that people want this feature, but it also knows it would be bad for the platform's vibes.
Instagram head Adam Mosseri regularly does AMAs on his personal account, and he's answered questions about why there's no "who unfollowed me" feature. His reasoning (gone from his page but have been aggregated in other videos) is that they want to make people feel comfortable unfollowing people they're no longer interested in.
To most people, it is obvious that this feature could hurt people's feelings, especially younger users (let's assume that Instagram does care about teen users' feelings here, although I understand if you have some hesitations on that). Feeling bad while using the platform is a bad user experience!
It's also ultimately bad for Instagram. If you're reluctant to unfollow accounts you don't like, then you'll end up with a feed that's less compelling, and you'll end up opening Instagram less often or spending less time on it. That's bad for Instagram's daily active user metrics!
Yes, Muse can actually do thisThere are, and have been, third-party services that can track who unfollows you. These sometimes require access to your login info in ways I definitely wouldn't recommend, and can track over time who has unfollowed you. So it's not like Muse is doing something totally novel or unheard of here.
I asked Muse to do this for me, and it said it could — with a caveat: it will start tracking my follow lists to see who unfollows me going forward, but it can't retroactively check who unfollowed me in the past (that's mostly the same as the other trackers). And honestly? I don't want to know! No thanks! Yikes!
I asked Muse to track who unfollowed me on Instagram (despite not wanting to really know). It could only track going forward, but after two days, it found one.
Business Insider
Is this just one stupid ad? Yes. Was it set up and run as an ad by someone at Meta far removed from Instagram's philosophy on unfollows? Probably. Is it the most shocking news in the world if Meta runs a single ad and then takes it down? No.
But this interests me so much because it gets at a bigger and thornier issue. AI agents like Muse are what Meta clearly sees as the future of the company and how people use its services. But AI agents' abilities and use cases may be at odds with the nature of social media.
In the simplest way, AI agents are supposed to help you be efficient and get things done. Social media is supposed to help you waste your time.
These are two vastly different objectives — and it's going to be interesting to see how these two new technological pillars of Meta clash or complement each other.
Already, we have one Meta product (Muse) that is more than happy to do something that another Meta product (Instagram) has long discouraged.
There are plenty of other features that people want to do on social media, but Instagram and Facebook don't allow because it's bad for the overall health of the platforms. Suddenly, AI agents like Muse can do these long-forbidden things. The question is: how far is Meta willing to cannibalize the health of its own social platforms for the sake of growing its AI?
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Merriam-Webster defines "fridge cigarette" as "a cold, refreshing, and addictive soft drink." Yui Mok/PA Images via Getty Images If you've ever cracked open a bubbly, icy-cold "fridge cigarette," Coca-Cola's CEO would like a word.
The beverage giant's CEO, Henrique Braun, was asked about the phrase — a popular slang term for a can of Diet Coke — in a Tuesday interview with Yahoo Finance, and appeared unimpressed.
He first answered by promoting the company's growth, before being pressed for his thoughts on the nickname.
"The consumers call it the way they want to call it," Braun said. "The most important thing to us is that we don't position Diet Coke in that way."
"It's a great-tasting product, which connects with the consumer in a very unique way."
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Coca-Cola did not immediately respond to a request for further comment.
A crisp, refreshing Diet Coke is the beverage equivalent of smoking a cigarette, some people argue. Justin Sullivan/Getty Images Merriam-Webster defines "fridge cigarette" as "a cold, refreshing, and addictive soft drink," noting that it's especially used to refer to Diet Coke.
The phrase first gained traction with Gen Z through a viral TikTok video in 2025, which has nearly 4 million views. It showed a woman opening a can of the soda, with the text: "Overheard someone call a Diet Coke a 'fridge cigarette' and nothing's been more true to me since."
It makes sense that Braun would rather avoid any comparisons to cigarettes, especially given some previous bad media for Diet Coke.
Aspartame, an artificial sweetener used in the soda, made headlines in 2023 after the International Agency for Research on Cancer classified it as possibly carcinogenic to humans.
However, this classification only means there is limited evidence in humans and less-than-sufficient evidence in animals. Health bodies and regulators globally have maintained their acceptable daily intake levels of aspartame. An adult weighing 150 lbs would have to drink at least 17 cans of Diet Coke a day to exceed the safe amount.
Diet Coke contains more caffeine, the use of which can lead to dependence, than regular Coca-Cola.
To most people, "fridge cigarette" instead evokes the relief from drinking a soda. An excuse to step away from work for a moment and indulge with a gratifying treat.
Rachel Reno, who posted the viral TikTok, told The New York Times in 2025, "I feel like it's one of those things that doesn't need a lot of explanation."
She added that people who understand it know that "the crack of the can is like the spark of a lighter," and then after the first sip, "all the worries and cares in the world go away."
Braun's interview came the same day as Coca-Cola's quarterly earnings, which narrowly beat estimates with $13.4 billion of revenue.
The CEO told investors on an earnings call that Diet Coke and Coca-Cola Zero grew by double digits. Coca-Cola's share price is up 33% since the start of the year.
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Alphabet spent more on capital expenditures last quarter than it generated in operating cash flow, so it turned to stock sales and a mountain of new debt to keep the AI buildout running. What that means for shareholders is more…
Alphabet (NASDAQ:GOOG | GOOG Price Prediction, NASDAQ:GOOGL) spent $51.355 billion on capital expenditures in the third quarter of 2026, up 114.4% from the prior year. The cash-flow statement released after the close on Oct. 28, 2026 shows how it paid for that.
Alphabet raised about $41.4 billion in gross proceeds, adding $12.371 billion from common stock sales with $28.996 billion of new debt. After $3.626 billion in debt repayments, Alphabet’s net new money came to about $37.7 billion.
Alphabet bought back $0 of its own stock in the quarter, versus $11.504 billion in the third quarter of 2025.
Alphabet shares closed Oct. 28 at $324.89 and traded at $292.50 after hours around 7:59 p.m. ET, down 9.97%. The quarterly 10-Q had not appeared on EDGAR as of early Oct. 29.
What Alphabet Actually Raised in the Quarter All of the quarter’s stock sales went through Alphabet’s at-the-market (ATM) program. Under an ATM program, a company sells new shares into the market in small tranches at the current price.
Alphabet sold 12 million Class A shares for $4.3 billion and 24 million Class C shares for $8.1 billion, leaving Alphabet $27.6 billion of capacity as of Sept. 30.
Alphabet announced the $40 billion ATM program on June 2, 2026, as part of an $84.75 billion equity raise. The third quarter was the first one in which those sales were scheduled to start.
The June release said Alphabet planned to use ATM proceeds “primarily to facilitate, for a period of time, an administrative change in how Alphabet meets tax obligations” linked to employee stock awards. In the quarter, Alphabet Inc.’s net payments for stock-based awards came to $5.368 billion.
The capex money linked directly to debt. Alphabet Inc. issued $28.7 billion of senior unsecured notes for general corporate purposes.
Dilution and Interest Costs Now Reach GOOGL Owners Alphabet’s diluted share count rose to 12,368 million from 12,203 million, up about 1.4%. Buybacks used to reduce that count, which helped earnings per share grow faster than profits, but the count is now going up.
Alphabet Inc.’s interest expense rose to $967 million from $143 million. Alphabet’s long-term debt reached $125.102 billion, versus $46.547 billion at the end of 2025. Alphabet Inc. also paid $298 million in preferred dividends.
Spending Has Outrun Cash Flow for Two Quarters Alphabet’s operating cash flow of $42.290 billion did not cover capex, so free cash flow was negative $9.065 billion, following Alphabet’s negative $5.855 billion in the second quarter. Alphabet’s trailing 12-month free cash flow fell about 73% to $19.747 billion.
Alphabet CFO Anat Ashkenazi kept 2026 capex guidance at $195 billion to $205 billion. She also said, “We continue to expect our CapEx to increase significantly in 2027.”
Ashkenazi said Alphabet ended the quarter with $265.1 billion in cash and marketable securities. That total includes $90.4 billion of stock holdings, the same kind of asset behind the quarter’s $8.7 billion loss. That is part of why Alphabet borrows anyway. The release did not say when Alphabet will use its remaining ATM capacity, and it gave no figure for 2027 capex.
What Cloud Growth Means for GOOGL Owners The spending is likely already bringing in revenue fast enough to justify some dilution. Google Cloud revenue rose 103% to $30.709 billion, and operating income reached $11.121 billion, up from $3.594 billion a year earlier.
With a debt-to-equity ratio of 0.143 and a trailing P/E of 14, Alphabet can keep borrowing without stressing its balance sheet. Free cash flow may stay negative through 2027, which is likely the cost of Alphabet’s expansion at this stage.
The fourth-quarter call will show whether this argument holds, and it weakens if Alphabet Inc. sharply raises 2027 capex while Cloud growth slows well below 103%, or if the 10-Q shows it quickly drawing down the $27.6 billion left in the ATM program. A move back above the $324.89 close would show the market has absorbed the raise.
Contact [email protected] for any questions or corrections.
SummaryAlphabet Inc. plunged 11% after Q3 earnings, driven by AI cannibalization fears and disappointing search ad revenue.Despite negative free cash flow and soft EPS, Google Cloud posted 103% YoY revenue growth and 36.2% margins.I maintain a Buy rating on GOOG, citing compelling valuation, robust AI infrastructure investment, and normalized EPS near $15 with double-digit growth potential.GOOG's technical downside risk remains, but buying near $270 offers favorable risk/reward as intrinsic value is well above current market price. jetcityimage/iStock Editorial via Getty Images
Alphabet Inc., aka Google (GOOG) plunged 11% after releasing its Q3 earnings report, a loss of more than $400 billion in market cap. Concerns turned to how much AI engines are eating into
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New York, New York--(Newsfile Corp. - October 29, 2026) - Bronstein, Gewirtz & Grossman, LLC, a nationally recognized investor-rights law firm, announces that a class action lawsuit has been filed against Alphabet Inc. (NASDAQ: GOOG) and certain of its officers.
This lawsuit seeks to recover damages against Defendants for alleged violations of the federal securities laws on behalf of all persons and entities that purchased or otherwise acquired Alphabet securities between May 19, 2026 and July 16, 2026, both dates inclusive (the "Class Period"). Such investors are encouraged to join this case by visiting the firm's site: bgandg.com/cases/alphabet-inc-goog-class_action_lawsuit.
Alphabet Case Details
The complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that:
Gemini 3.5 Pro was delivering disappointing training results; as a result, the launch of Gemini 3.5 Pro would be significantly delayed; and as a result of the foregoing, Defendants' positive statements about Alphabet's business, operations, and prospects were materially misleading and/or lacked a reasonable basis.What's Next for Alphabet Investors?
A class action lawsuit has already been filed. If you wish to review a copy of the Complaint, you can visit the firm's site: bgandg.com/cases/alphabet-inc-goog-class_action_lawsuit, or you may contact Peretz Bronstein, Esq. or his Client Relations Manager, Nathan Miller, of Bronstein, Gewirtz & Grossman, LLC at 917-590-0911. If you suffered a loss in Alphabet you have until December 1, 2026, to request that the Court appoint you as lead plaintiff. Your ability to share in any recovery doesn't require that you serve as lead plaintiff.
No Cost to Alphabet Investors
We, Bronstein, Gewirtz & Grossman LLC, represent investors in class actions on a contingency fee basis. That means we will ask the court to reimburse us for out-of-pocket expenses and attorneys' fees, usually a percentage of the total recovery, only if we are successful.
Why Bronstein, Gewirtz & Grossman, LLC for Alphabet Securities Class Action?
Bronstein, Gewirtz & Grossman, LLC is a nationally recognized firm that represents investors in securities fraud class actions and shareholder derivative suits. Our firm has recovered hundreds of millions of dollars for investors nationwide. More at www.bgandg.com
"Our practice centers on restoring investor capital and ensuring corporate accountability, which serves to uphold the essential integrity of the marketplace," said Peretz Bronstein, Founding Partner of Bronstein, Gewirtz & Grossman, LLC.
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Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) shares tumbled about 12% Thursday after third-quarter results paired a record cloud quarter with softer search growth and a steep earnings miss. Five of the six firms listed below trimmed price targets, though most kept bullish ratings.
LOS ANGELES, Oct. 29, 2026 (GLOBE NEWSWIRE) -- The Law Offices of Frank R. Cruz reminds investors of upcoming lead plaintiff deadlines in securities class action lawsuits filed on behalf of shareholders of Alphabet Inc. and Coastal Financial Corporation. Investors who wish to seek appointment as lead plaintiff must file a motion by the deadlines listed below.
If you lost money on these investments, contact The Law Offices of Frank R. Cruz about these class actions to learn about your legal rights, by calling 310-914-5007 or emailing [email protected].
Alphabet Inc. (NASDAQ: GOOGL)
Class period: May 19, 2026 through July 16, 2026Lead plaintiff motion deadline: December 1, 2026Case: Stewart v. Alphabet Inc. et al., filed in the U.S. District Court California Northern District (San Jose)
According to the Alphabet Inc. complaint, throughout the class period the defendants made false and/or misleading statements and/or failed to disclose that: (i) that the Gemini 3.5 Pro was delivering disappointing training results; and (ii) that, as a result, the launch of Gemini 3.5 Pro would be significantly delayed.
If you are a Alphabet Inc. shareholder who suffered a loss, click here to participate.
Coastal Financial Corporation (NASDAQ: CCB)
Class period: October 28, 2024 through July 29, 2026Lead plaintiff motion deadline: December 1, 2026Case: Allegheny County Employees' Retirement System v. Coastal Financial Corporation et al., filed in the USDC Western District of Washington at Seattle
According to the Coastal Financial Corporation complaint, throughout the class period the defendants made false and/or misleading statements and/or failed to disclose that: (i) the credit quality of a substantial CCBX partner loan portfolio, comprising approximately $500 million in loans and nearly 23% of all CCBX loans, had materially deteriorated; (ii) as a result of that deterioration, Coastal faced significant exposure to credit losses notwithstanding Defendants’ repeated representations concerning the credit protections provided by its CCBX partner agreements; and (iii) Coastal’s risk management and credit monitoring practices were inadequate to identify, adequately account for, and mitigate the deterioration of the CCBX partner loan portfolio and the resulting risks to Coastal.
If you are a Coastal Financial Corporation shareholder who suffered a loss, click here to participate.
What should investors in these cases do now?
Investors need not take any action at this time to be class members in these cases. Investors may retain counsel of their choice or take no action and remain absent class members. No class has been certified yet in any of these cases.
For more information about these class actions or your rights, contact Frank R. Cruz of The Law Offices of Frank R. Cruz at 310-914-5007, by email at [email protected], or visit the firm's case page.
If you inquire by email, please include your mailing address, telephone number, and number of shares purchased.
About The Law Offices of Frank R. Cruz
The Law Offices of Frank R. Cruz investigates and prosecutes securities fraud and corporate malfeasance class actions. With nearly 20 years of litigation experience, the firm focuses on complex securities class actions and gives each client personal, one-on-one attention throughout the legal process.
Alphabet’s market capitalization plunged by $500 billion on Thursday as the stock dropped more than 11% – on track for its worst loss ever as AI chatbots eat into Google’s Search business.
If the stock closes down more than 9.77% in Thursday’s session, it will be the worst reaction in the company’s 22-year history and the second-largest single-day loss of any stock. Nvidia currently holds the record with a roughly $589 billion loss on Jan. 27, 2025.
In the third quarter, Alphabet reported its first double miss for both earnings per share and revenue since the end of 2022 as AI chatbots hit its core Google Search business. The company also disclosed that it has been burning through cash faster than expected.
Alphabet CEO Sundar Pichai (above) speaks during a White House meeting. Bloomberg via Getty Images
Investors sounded the alarms over the miss, since the high-margin Search business typically provides much of the funding that Alphabet has been using to spend big on the AI build-out.
“This may be the quarter we feared,” Gil Luria, head of technology research at D.A. Davidson, told CNBC, nodding to concerns that AI agents will steal business from traditional search engines.
Total revenue for the third quarter was $127.6 billion, missing estimates of $128.2 billion. Net income fell 25% to $26.17 billion. Adjusted earnings per share of $2.67 also missed expectations of $3.02.
Alphabet’s cloud business made $30.7 billion, beating analysts’ expectations. But its services business – which includes Search – recorded $96.3 billion, missing estimates of $98.5 billion.
Revenue from Google’s Search grew just 12% in the third quarter over the past year, down from 17% in the second quarter and 19% in the first quarter. It also missed forecasts for the second straight quarter.
Chief Financial Officer Anat Ashkenazi announced that capital expenditures will increase significantly next year, largely driven by the AI race – even as the tech giant revealed it has been flying through its cash reserves.
Google’s Search business missed forecasts for the second straight quarter. dpa/picture alliance via Getty Images
Alphabet reported negative free cash flow of $9.07 billion in the third quarter, worse than Wall Street expectations that it would come close to breaking even.
The company had revealed a negative cash flow of $5.9 billion in the second quarter, marking the first time it fell into the red since the company went public in 2004.
It’s just one of the many companies spending billions on AI research and computing power, eager to build up troves of compute and lease the capacity out to other companies.
The Nasdaq fell Thursday as Google’s Search miss weighed on tech stocks. REUTERS
Alphabet reported a $7.66 billion operating income loss in “Alphabet-level activities,” which it said is largely related to AI development.
Microsoft, meanwhile, reported $45.2 billion in capital expenditures in the third quarter – 30% higher than the same time last year but significantly below expectations of $50.67 billion. It also lowered its full-year spending forecast to $170 billion.
The company’s free cash flow fell 27% to $18.63 billion, but remained positive.
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Azure, its cloud computing sector, jumped 48% to become the company’s largest business.
The spending pullback initially came as a welcome reprieve for investors, who have been concerned that companies are spending too heavily on AI.
But shares of Microsoft ultimately fell 1.4% as traders took the slowdown as a sign that the company is not expecting blowout returns from AI investments anytime soon.
It also weighed on other “neocloud” stocks – a name for companies that rent out AI computing capacity. Shares of IREN and Nebius fell 4% and 2.8%, respectively.
The Nasdaq plummeted 1.1% Thursday as Google’s Search revenue weighed on other tech and AI stocks.
Key Takeaways Alphabet missed Q3 earnings and revenue estimates, sending shares sharply lower in premarket trading.Alphabet's cloud growth remains strong, but search weakness weighs on sentiment.Rising capex and two consecutive quarters of negative free cash flow raised investor concerns.
Alphabet (GOOGL - Free Report) came up with disappointing third-quarter 2026 earnings on Oct. 28, after market close. Earnings of $2.12 per share came in below the Zacks Consensus Estimate of $2.94 by 27.89%. The bottom line fell 26.13% from earnings of $2.87 per share recorded in the same period last year.
GOOGL shares declined about 11.5% in pre-market trading on Oct. 29 as the company missed revenue and earnings estimates. Negative free cash flow and disappointing performance in its core search advertising business left investors disappointed.
Snapshot of Q3 EarningsAlphabet posted revenues of $111.21 billion for the quarter ended September 2026, failing to beat the Zacks Consensus Estimate of $111.8 billion by 0.53%. However, revenues increased 27.14% from the year-ago quarter.
Alphabet’s net income for the quarter fell about 25.18% from the year-ago quarter to $26.17 billion. However, the tech giant’s operating income for the quarter was $40.58 billion, which marked an increase of 29.93% from the year-ago quarter.
Segment SnapshotsThird-quarter revenues from Google advertising reached $82.01 billion, up 10.56% from the year-ago quarter. The segment’s revenues missed the Zacks Consensus Estimate of $83.52 billion by 1.81%. The segment includes Google Search & other, YouTube ads and Google Network.
Revenues from Google Search & other, which reached $63.35 billion in the third quarter, marked a rise of nearly 12% from $56.57 billion in the year-ago quarter. YouTube ad revenues increased 9.22%, to reach $11.21 billion in the third quarter.
However, revenues from both Google Search & other and YouTube ads lagged the Zacks Consensus Estimate by 2.53% and 1.21%, respectively. According to Yahoo Finance, the disappointing performance of the search business raised investor nervousness. As per the article, the revenue miss fueled concerns that Google's search dominance could face growing competition from AI chatbots such as Claude and ChatGPT, despite the company's massive investments in AI.
Revenues from Google Services, which includes Google advertising and Google subscriptions, platforms and devices, increased 10.63% from the year-ago quarter, reaching $96.3 billion. Operating income from the segment reached $39.16 billion for the quarter ended September 2026, marking an increase of 16.79% from the prior-year figure of $33.53 billion.
Alphabet’s Google Cloud business witnessed a substantial surge, with operating income increasing to $11.12 billion, an impressive 209.43% increase from the prior-year figure of $3.59 billion. Revenues from the Cloud segment also witnessed a substantial rise of 102.61% year over year to $30.71 billion. The segment’s revenues surpassed the Zacks Consensus Estimate of $29.16 billion by 5.32%.
Google Cloud posted record growth, driven by strong performance across Google Cloud Platform (GCP), enterprise AI Solutions and enterprise AI Infrastructure, as well as core GCP services.
Alphabet's Capex Surge and Cash Burn Worry InvestorsAlphabet reported capital expenditures of $51.36 billion for the quarter ended September 2026, up nearly 114.4% from $23.95 billion in the year-ago quarter. The company's capital expenditures totaled $131.95 billion in the first nine months of the year, up from $63.59 billion in the same period last year.
Alphabet kept its 2026 capital expenditure forecast unchanged at $195 billion to $205 billion, following an increase from $190 billion in the second quarter. The company expects capex to top $200 billion this year and climb above $300 billion in 2027, as per a CNBC article. The company’s chief financial officer, Anat Ashkenazi, told analysts during an earnings call that Alphabet expects capital expenditures to increase significantly in 2027, as quoted on the abovementioned CNBC article.
As investors grow increasingly concerned about negative free cash flow across Big Tech, GOOGL reported negative free cash flow of $9.06 billion in the third quarter, worse than Wall Street estimates and marking its second consecutive quarter of negative free cash flow in 2026, following a deficit of $5.86 billion in the second quarter.
Alphabet’s Stock OutlookAlphabet currently has an average brokerage recommendation (ABR) of 1.20 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 54 brokerage firms.
The current ABR remains unchanged from a month ago and signals favorable analyst sentiment toward the tech giant. However, sluggish third-quarter results and expectations of a disappointing fourth quarter could prompt analysts to reassess their outlook.
Of the 54 recommendations deriving the current ABR, 47 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 87.04% and 5.56% of all recommendations, remaining unchanged from a month ago.
Based on short-term price targets offered by 51 analysts, the average price target for Alphabet comes to $432.69, ranging from a low of $350.00 to a high of $515.00. The average price target represents an increase of 33.18% from the last closing price of $324.89 (as of market close on Oct. 28). The tech giant has a Zacks Rank #3 (Hold) and a Momentum Score of A.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ETFs to ExploreHere, we have highlighted ETFs with heavy exposure to Alphabet.
Global X PureCap MSCI Communication Services ETF (GXPC - Free Report) has an exposure of 31.49% to GOOGL.
VanEck Communication Services TruSector ETF (TRUC - Free Report) has an exposure of 14.86% to GOOGL.
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report) has an exposure of 14.06% to GOOGL.
Vanguard Communication Services ETF (VOX - Free Report) has an exposure of 13.97% to GOOGL.
iShares Global Comm Services ETF (IXP - Free Report) has an exposure of 13.12% to GOOGL.
State Street Communication Services Select Sector SPDR ETF (XLC - Free Report) has an exposure of 12.49% to GOOGL.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Alphabet (GOOG -12.57%) (GOOGL -12.71%) shares tumbled more than 11% on Thursday, plunging toward $287 and marking one of the steepest single-day sell-offs in the company's history. As of 11:50 a.m. ET, the Class A stock (the one with votes) is down 11.8%, and the Google parent has lost $410 billion of market value.
The correction followed Alphabet's third-quarter report, which delivered the tech giant's first bottom-line earnings miss against Wall Street consensus since the last quarter of 2022.
GOOGL Alphabet$283.61-$41.28 (-12.71%)
NASDAQ · As of 1:36 PM ET 10/29/26
Unpacking the first earnings miss in nearly four yearsLet's not beat around the bush. Alphabet missed the Street's bottom-line consensus, posting earnings of $2.12 per share against expectations near $3.02. But it's fair to consider the reasons before hitting the "sell" button.
The shortfall was amplified by an $8.2 billion non-operating, unrealized loss from a decline in the value of Alphabet's equity stake in Space Exploration Technologies (SPCX -0.58%), alongside a $5.2 billion cash payment for an EU antitrust fine.
Keep in mind that Alphabet famously doesn't issue revenue and earnings guidance, leaving analysts to develop their own financial models. It's more guesswork than usual.
In this light, the miss looks more like an accounting paper-cut than a broken business model. After all, Google Cloud revenues more than doubled year-over-year, and search queries posted their largest volume growth in five years.
Image source: Alphabet.
A half-trillion-dollar backlog proves the AI demand is realThe real albatross is Alphabet's beastly capital expenses. The company spent $51.4 billion in capex this quarter alone, resulting in a free cash flow burn of $9.1 billion. Management is holding firm on its full-year spending guide of $195 billion to $205 billion. Naturally, this heavy lifting is starting to show up on the income statement as rising depreciation and amortization (D&A).
That explains why the stock's trailing P/E is an affordable 15.0 while the forward multiple creeps up near 19.0 -- still reasonable but higher than the current ratio. The market is pricing in tomorrow's D&A hangover today.
Here is the irony: Google Cloud's backlog swelled to $561 billion. Customers are lining up around the block for AI compute, TPU systems, and Gemini enterprise seats. Management isn't guessing; they are scrambling to build capacity for confirmed demand.
For long-term shareholders willing to absorb near-term margin compression, the core business remains a cash-generating engine. The costly AI infrastructure will keep writing Alphabet's headlines anyway.
Alphabet (GOOGL) is one of the worst performers in the S&P 500 (SPX) as the stock suffers one of its steepest single-day losses on record. Marley Kayden turns to the key metrics making investors second-guess the Mag 7 giant's forward momentum as it doubles down on AI spending.
After the market closed on Oct. 28, Alphabet (GOOGL -12.71%) reported that its cloud business had more than doubled its revenue in a year. In the same release, it showed that it had spent about $9 billion more cash than it brought in during the quarter. The stock fell over 10% at Thursday's open.
Rule Breakers recommended Alphabet on June 9, 2022, at a split-adjusted $113.75. Even after that drop, the stock has gained more than 150% from that price and remains comfortably ahead of the S&P 500. Across Motley Fool services, Team Rule Breakers and Team Hidden Gems have recommended it many times since.
The first of six Rule Breakers Principles is: Make Your Portfolio Reflect Your Best Vision for Our Future.
The idea is to own companies whose success would build the world you hope to see, and to lean optimistic about where that world is heading. Rule Breaker investors favor companies with multiple futures. Most large companies have only a couple of realistic paths ahead, while the best innovators may have a dozen or more. David Gardner has long pointed to Alphabet as the leading example, with Google's search profits paying for ventures from AI to self-driving cars.
Several Futures Arrived in One QuarterGoogle Cloud brought in $30.7 billion in the quarter, up 103%, and its operating profit roughly tripled. Part of that growth came from selling Alphabet's custom AI chips, called TPUs, to outside customers, a relatively new line of business.
Alphabet said search queries grew at their fastest pace in five years. It also owns stakes in other fast-growing companies, and swings in their value have moved its reported profits by tens of billions of dollars this year.
Google Cloud, long the third-place player in cloud computing, now accounts for nearly a quarter of Alphabet's revenue.
The Bill for All Those FuturesAlphabet expects to spend $195 billion to $205 billion on capital projects this year, mostly data centers and chips, and management said that figure will rise significantly in 2027. Spending at that pace pushed free cash flow negative for the quarter. Alphabet's long-term debt has climbed to about $125 billion, nearly six times what it was a year earlier.
Reported earnings per share fell about 26%, though most of that came from paper losses on its equity stakes. Operating income still grew 30%.
When the Engine SlowsSearch, the business that has paid for everything else, is losing speed. Google Services revenue grew 11%, down from 15% the previous quarter, and search revenue came in short of expectations. Search profits funded Alphabet's experiments for two decades, and borrowed money now covers part of that bill.
If AI demand cools before the new data centers pay off, the debt would stay on the books, and Alphabet's balance sheet would look a lot more like an ordinary company's.
Where That Leaves Alphabet's ShareholdersOwning Alphabet now means believing that cloud and AI chips will earn back their enormous cost, and that search slowed in one quarter without losing its grip on how people find things. It also means accepting a period in which debt covers part of what cash once paid for on its own. An investor who sees AI spending as a bubble will find that trade unappealing.
Alphabet's customers appear to be betting the other way, with Google Cloud's backlog of signed contracts above half a trillion dollars. Investors who share that view can buy those futures today for about 10% less than before the report.
Meta and Alphabet both torched billions in fresh capex while free cash flow went negative, and now one of them is betting its future on an AI agent that its own CEO admits costs a fortune to run.
Meta Platforms (NASDAQ:META | META Price Prediction) and Alphabet (NASDAQ:GOOGL) both missed EPS estimates this month. In both cases, the miss came from items outside their ad businesses. Meta took a $9.89B legal charge. Alphabet recorded an $8.70B equity securities loss. Underneath those charges, both ad businesses grew quickly while AI capex jumped and free cash flow turned negative.
Ad Pricing Carries Meta While Cloud Carries Alphabet
Meta’s revenue rose 26.1% to $64.60B. Average price per ad climbed 14%, as advertisers paid more per ad. Nearly 10 million advertisers used a generative AI creative tool. Without the legal charge, operating income would have risen 11%. That is a healthy core hidden by a messy headline.
Alphabet’s highlight was Google Cloud, where revenue rose 103% to $30.71B. Search still matters too. Sundar Pichai said “our year-over-year query growth rate is the highest it’s been in the last five years.” That answers the worry that AI chatbots would hollow out Search, at least for now.
Business Driver
Meta
Alphabet
Main Growth Engine
Ad pricing, +14%
Google Cloud, +103%
Q3 Capex
$34.91B
$51.36B
Free Cash Flow
-$2.12B
-$9.07B
Consumer Superintelligence Meets Full-Stack Selling
Meta is building toward Muse, its personal AI agent. More than 10 million people in the U.S. and Canada set it up in about six weeks, and more than 25% of weekly users shop through it. Those are strong early numbers. Muse is also expensive to serve. Mark Zuckerberg admitted it is “very compute-intensive to run” and is aiming for a more than 10x gain in efficiency within a year. To help fund the expansion, Meta plans a new nonvoting share class, which works out to an effective 2-for-1 stock split.
Alphabet sells its infrastructure to outside customers. Pichai pointed to “strong demand for our TPU systems across a wide range of customers.” It is still raising cash, though: $28.7B in notes plus at-the-market stock sales, which means dilution.
Muse Costs and TPU Demand Will Decide 2027
I will be watching whether Meta can turn Muse into commerce fees and subscriptions before its $135-145B 2026 capex plan, plus whatever comes next, weighs further on cash (the power, cooling, and networking suppliers behind that expansion are the subject of a free report on seven AI infrastructure stocks that aren’t chipmakers). More youth-related trials are also on the calendar.
You should keep an eye on Alphabet’s spending as well. It held its 2026 capex outlook steady but expects a significant increase in 2027. Its shared AI research loss grew to $7,655 million from $4,467 million.
Why I Lean Toward Alphabet’s Paying Customers
Meta shares have fallen 12.19% in the week since earnings. That drop followed the earnings report. Even so, Alphabet’s spending has a cleaner revenue base. Its spending is supported by Cloud customers paying for capacity today, and it trades at a P/E near 14 versus Meta’s 22. Meta’s case rests on Muse becoming a commerce platform. My view could shift if Muse revenue shows up clearly in 2027 and the legal uncertainty passes.
Contact [email protected] for any questions or corrections.
Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) took an $8.7 billion paper loss on its investment portfolio in the third quarter, with Space Exploration Technologies Corp.‘s (NASDAQ:SPCX) falling share price doing most of the damage. The hit reduced earnings by 55 cents per share, accounting for roughly 61% of the 90-cent earnings miss — and continued declines in SpaceX stock suggests the accounting pain could continue into the current quarter.
Alphabet's latest capital spending report just sent shockwaves through AI data center stocks, and IREN and Cipher Digital are absorbing the worst of the damage. The question rattling investors is whether the hyperscalers bankrolling this infrastructure boom can actually afford…
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Worries over how the biggest cloud spenders will pay for artificial intelligence (AI) are hitting the companies that build and rent them data center capacity. IREN Limited (NASDAQ:IREN) stock is at $27.04, down 6% by midday. Cipher Digital (NASDAQ:CIFR) stock is at $8.41, down 5%, as caution builds ahead of the company’s upcoming quarterly report.
Losses across IREN’s corner of AI infrastructure are running well ahead of large-cap technology. Invesco QQQ Trust (NASDAQ:QQQ) shares currently sit at $715.17, down 1%. Broad-market losses are smaller still, with the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) at $769.06, down 0.4%.
Alphabet’s Cash Burn Puts Hyperscaler Spending Under the Microscope
Alphabet posted a Q3 2026 report showing capital spending of $51.3 billion. That outlay left Alphabet’s free cash flow at negative $9.1 billion, the second straight negative quarter for the company. To fund its AI expansion, Alphabet is leaning on debt issuance and at-the-market stock sales.
Microsoft is spending more as well, with its quarterly report showing capital expenditures of $45.2 billion in Q1 FY2027. Guidance from Microsoft calls for more than $50 billion next quarter, though the company kept its free cash flow positive. Shares of Microsoft have given up their gains and turned lower.
Spending at both hyperscalers is still climbing. What’s weighing on IREN and Cipher Digital is a bigger question: whether those customers can keep funding the expansion and earn a return on it, since that expansion drives demand for the capacity both companies are racing to deliver. IREN is sliding alongside other AI cloud and data center operators as that debate spreads across the group.
All of that hyperscaler spending has to be built, powered, and cooled by somebody, which is why the suppliers behind the data centers keep showing up in our free report on seven AI infrastructure stocks that aren’t chipmakers.
What Cipher Digital and MARA Reveal About IREN’s Slide
Over the past month, Cipher Digital stock is down 50%. IREN stock is down 35% over the same stretch. Part of Cipher Digital’s selling looks like caution ahead of its next report, since its Q2 2026 results on August 4 showed revenue of $24.84 million, missing expectations. Cipher Digital’s generally accepted accounting principles (GAAP) net loss of $267.5 million included a $150.5 million non-cash warrant charge.
MARA Holdings (NASDAQ:MARA | MARA Price Prediction) stock is at $7.28, down 0.9%. That small dip cuts against a clean sector-wide story, since MARA is also moving toward AI infrastructure. Bitcoin (CRYPTO:BTC) mining remains MARA’s core business, and as of its Q2 2026 update, the company was still working to sign its first AI data center lease, which may leave it less directly tied to hyperscaler budgets.
How IREN’s Business Model Differs From Cipher Digital and MARA
IREN operates its own AI cloud, buying graphics processing units (GPUs) and renting computing power to customers including Microsoft and leading AI labs, and owning the hardware gives IREN direct exposure to computing prices, along with heavy reliance on a small group of buyers.
Cipher Digital takes a landlord approach, developing powered data center campuses and leasing them to hyperscale tenants under long-term contracts, trading upside on computing prices for steadier rent, though it relies on substantial debt to fund several projects at once. MARA sits further back in the transition, with most of its operations still tied to mining.
IREN and Cipher Digital Head Into Earnings Under Pressure
IREN’s upcoming report needs to show AI cloud growth on pace for its $4 billion signed annualized recurring revenue (ARR) target by December 31. IREN’s Q4 FY2026 results on August 27 showed revenue of $137.2 million and a GAAP net loss of $684 million, which included a $450.4 million non-cash impairment on retired mining hardware.
For Cipher Digital, investors need to see if rental payments at Barber Lake began in October as expected. The bulls can point to long-term hyperscale contracts and IREN’s own claim that “Our 2026 capacity is largely sold out.” Skeptics see risk in Alphabet’s negative free cash flow, heavy borrowing across the group and the chance that hyperscalers slow their pace if returns lag.
Both companies’ upcoming reports could sharpen that debate in either direction, for IREN and Cipher Digital alike. Investors may want to wait while the AI spending debate plays out.
Contact [email protected] for any questions or corrections.
The US filed a lawsuit on Thursday accusing Google of failing to give an employee his old job back or put him in a similar job following one year of military leave as a US Army reservist.
The case is a rare instance of the US government suing a private employer for violating the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which protects the civilian employment of military personnel called to active duty.
According to a complaint filed in Manhattan federal court, Mark Davisson had spent 2-1/2 years as a Google key account executive, where he handled cloud services accounts for asset manager BlackRock and hedge fund Bridgewater Associates, and managed the US business of the former Credit Suisse.
Army reservist Mark Davisson had spent 2-1/2 years as a Google key account executive, where he handled cloud services accounts for BlackRock and Bridgewater, and managed the US business of the former Credit Suisse. Mark Davisson / Facebook Employee fired after further military leave Upon Davisson’s return from leave in May 2023, Google – a unit of Mountain View, Calif.-based Alphabet – allegedly refused to let Davisson handle any customer accounts, depriving him of career advancement though he kept his pay and title.
The complaint said Google assigned Davisson in January 2024 to a cloud solutions position that also involved no management of customer accounts, and fired him seven months later following another military leave and as part of a broader workforce reduction.
Davisson has a home in Charlotte, NC, but lived and worked in Manhattan while Google employed him.
Google did not immediately respond to requests for comment.
The complaint said Google assigned Davisson in January 2024 to a cloud solutions position that also involved no management of customer accounts, and fired him seven months later following another military leave and as part of a broader workforce reduction. Mark Davisson / Facebook Lost wages and benefits The lawsuit was brought by the civil rights unit of the US Attorney’s office in Manhattan, with backing from Assistant Attorney General Harmeet Dhillon, the Trump administration’s top civil rights enforcer.
It seeks to recoup lost wages and benefits as well as additional damages for Davisson, and requires Google to ensure a nondiscriminatory workplace including by improving training regarding USERRA.
The suit seeks to recoup lost wages and benefits as well as additional damages for Davisson, and requires Google to ensure a nondiscriminatory workplace including by improving training regarding USERRA. Gado via Getty Images “Federal law ensures that our brave soldiers, who sacrifice so much to keep us safe, are not punished by employers when they return to the civilian workforce after completing their military service,” US Attorney Jamie McDonald in Manhattan said in a statement.
James Demmert believes fears that AI CapEx won't generate meaningful returns for investors should be squashed following Microsoft (MSFT) and Alphabet (GOOGL) earnings. The next test will come with Amazon (AMZN) and its AWS growth after Thursday's close.
Amazon is slated to report third-quarter earnings results after the bell on Thursday.
Here's what analysts are expecting, according to LSEG:
Earnings per share: $1.96 adjustedRevenue: $202.31 billionWall Street is also looking at other key revenue numbers:
Amazon Web Services: $45.48 billion, according to StreetAccount Advertising: $20.82 billion, according to StreetAccount Investors expect to see robust growth in Amazon's cloud segment. AWS sales are predicted to grow 38%, according to StreetAccount, compared with a 37% gain last quarter. It would mark AWS's fifth consecutive quarter of revenue acceleration.
That momentum isn't expected to slow down. CEO Andy Jassy said Amazon's cloud capacity is "largely sold out" for next year, and it's received significant commitments for 2028 as well.
"We always leave a certain amount for on demand and our inference service Bedrock or EC2, but largely sold out all the big chunks," Jassy said on an Andreessen Horowitz podcast last week. "A good chunk of '28 is sold out."
Wall Street will be listening for any commentary from Amazon executives around AI spending.
Last quarter, the company hiked its capital expenditure forecast for 2026 to $220 billion, up from $200 billion. Analysts surveyed by StreetAccount expect Amazon's capex to creep up more than $280 billion in 2027.
Read more CNBC tech newsAI build-out hits snag as Google and Microsoft put off raising capex forecastsAlphabet earnings miss reflects first real sign that AI is taking a bite out of searchAs Waymo expands overseas, it remains a niche cash-burning businessHands-on with Apple’s first touchscreen laptop: Touch is totally optionalAmazon has rushed to bring more data centers online to meet surging demand for AI computing power. The aggressive spending has eaten into the company's cash flow. In July, the company reported negative free cash flow of $7.6 billion for the trailing twelve months, compared with positive free cash flow of $18.2 billion one year earlier. It's expected to be cash flow negative in the current quarter, with an outflow of $9.9 billion, according to FactSet estimates.
Alphabet and Meta both reported negative free cash flow in their latest quarterly earnings reports. Microsoft said Wednesday its free cash flow declined 27% in the fiscal first quarter, but its cash flow remained positive, unlike its hyperscaler peers.
As Amazon shells out more on AI, it's steadily trimmed its headcount. The company has laid off more than 57,000 staffers since 2022, or roughly 16% of its corporate workforce. The job cuts have continued on a rolling basis this year via smaller rounds of layoffs.
The company on Wednesday laid off some staffers in its device software and services team to "operate more efficiently and better align with our product roadsmap," an Amazon spokesperson confirmed to CNBC. Fewer than 250 employees were let go as a result of the job cuts, the company said.
During the third quarter, Amazon made headlines when it blocked Meta's Muse AI agent from shopping on its platform. The company said it was not given advance notice that Muse would access its webstore, and it never agreed to participate.
The move is in line with Amazon's broader stance on third-party agents accessing its site. Amazon has blocked dozens of external agents, including Perplexity, which the company sued last year over allegations that the startup concealed its AI shopping bots.
Amazon stock chart.
While it locks down its site from third-party agents, Amazon has increasingly invested in its own tools. In May, Amazon rebranded its Rufus AI shopping chatbot to Alexa for Shopping.
On Thursday, Amazon said more than 400 million shoppers have used the assistant, and the number of people using Alexa for Shopping's agentic features has "grown more than eight times since the start of the year."
The tool now has more than 100 shopping-related capabilities, the company said, including the ability to build gift lists, manage subscriptions and handle account changes.
As rivals Meta and OpenAI push deeper into AI shopping tools, analysts have said the services could pose a risk to Amazon's digital advertising business. Users are turning to services like Muse and ChatGPT to research products, or in some cases, handing off purchases to AI agents, which means they're bypassing sponsored ads on Amazon's site.
"We expect Amazon to eventually develop its own agentic shopping offering, with its proprietary purchase data and commerce infrastructure positioning it well," Deutsche Bank analysts wrote in a note last week. "The key question is whether Amazon can accommodate third-party agents on terms that preserve attractive monetization."
Amazon.com Inc. (NASDAQ:AMZN) shares are falling Thursday, hours before its third-quarter earnings report, as one market watcher warns that AI shopping assistants could threaten its retail business. Here's what you should know.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Alphabet's brutal selloff just raised the bar for Amazon's AWS report, and the question now is whether AWS margins and growth can hold up where a rival stumbled.
Caution is building around Amazon (NASDAQ:AMZN | AMZN Price Prediction) ahead of its upcoming third-quarter report, as a steep selloff in a fellow tech giant raises the bar for Amazon Web Services (AWS). Amazon stock is at $246.30 in midday trading, down 3%.
Among the other AI giants, Meta Platforms (NASDAQ:META) stock is at $629.16, up 3%. Microsoft (NASDAQ:MSFT) stock is at $522.92, down 2%.
Alphabet’s Selloff Raises the Bar for Amazon Alphabet (NASDAQ:GOOGL) stock trades at $286.17, down 12%, after quarterly results that disappointed investors. Capital spending at Alphabet came to $51.36 billion, short of the $55.09 billion analyst consensus. Weighing on the bottom line, an $8.7 billion loss on equity securities pulled Alphabet’s earnings per share (EPS) to $2.12, missing the expectations of Wall Street analysts, even as its Google Cloud revenue grew 103%.
Microsoft reported $45.2 billion in capital expenditures and finance leases, below the $50.7 billion consensus from Wall Street analysts, and blamed delayed third-party capacity. That delay moves some deliveries into the second half of Microsoft’s fiscal year, the company said. Chief Financial Officer Amy Hood noted that customer demand “continues to exceed available supply.”
Together, those reports set the background for Amazon, where AWS growth, AWS margins and the company’s own capital spending could draw the most attention. Wall Street analysts expect earnings of $1.97 per share on revenue of $202.25 billion, versus the $1.95 per share and $180.16 billion Amazon reported a year earlier. For AWS, Wall Street analysts see revenue of $45.68 billion, up 38%, with online store sales of $69.6 billion, up 3%, and advertising revenue of $20.91 billion, up 18%. Amazon’s AWS revenue grew 37% in Q2 2026, its fastest pace in 18 quarters.
In a research note, KeyBanc Capital Markets analyst Justin Patterson wrote, “We continue to believe AWS is well positioned to capitalize on AI demand, from workforces modernizing tasks and emerging consumer applications (e.g., AI assistants).” UBS analyst Stephen Ju puts AWS operating margins at 46% for 2027, above the 39% analyst consensus. Oppenheimer analyst Jason Helfstein also expects chip efficiency and revenue growth to lift Amazon’s margins.
Meta Breaks From the Pack as Rivals Slide Meta stands out as the only one of these AI giants moving higher. Even with that gain, the stock is down 4% year to date (YTD). When it reported on October 21, Meta raised the low end of its 2026 capital spending guidance, now $135 billion to $145 billion, setting the company apart from Alphabet and Microsoft. Advertising strength drove that quarter, with Meta’s revenue up 26.1% to $64.60 billion in Q3 2026.
Amazon stock is up 8% YTD. Microsoft stock is up 9% YTD, while Alphabet stock is now down 8%. Oracle (NYSE:ORCL) stock is at $140.13, down 3%. Down 27% YTD, Oracle has fell behind its AI peers this year.
Investors are sorting these giants one by one, judging each on how its AI spending and cloud growth are holding up. At Amazon, AWS serves as the profit engine behind a dominant e-commerce platform. Azure grounds Microsoft’s pitch alongside its enterprise software. Because Meta doesn’t sell cloud capacity, its advertising-driven spending reads as a signal on AI demand broadly, and the capex flowing out of all three is landing with the same handful of suppliers we profiled in a free report on the AI infrastructure buildout, across power, heat management and networking.
What Amazon’s AWS Report Has to Prove For Amazon, the question is whether AWS growth tops the consensus bar after Microsoft’s Azure revenue grew 48% in its latest quarter. AWS margins carry just as much weight, given how far the UBS forecast sits above the consensus. A third question for Amazon is whether the company cuts, holds or raises its capital spending plans after lifting them in July.
Bulls can point to five straight quarters of accelerating AWS growth and an AWS backlog growing at triple-digit rates. The bears worry that Amazon’s heavy AI building could squeeze cash flow. A cautious stance may be reasonable until the AWS margin question resolves.
Contact [email protected] for any questions or corrections.
Key Takeaways Microsoft reported Q1 fiscal 2027 revenues of $92.3 billion, up 19%, beating estimates by 1.88%.Azure revenues surged 48% to $33.2 billion, while Microsoft Cloud revenues grew 30% to $63.9 billion.Microsoft expects 2026 capital spending of $170 billion as AI demand exceeds available capacity. Microsoft (MSFT - Free Report) reported first-quarter fiscal 2027 earnings of $4.89 per share on a non-GAAP basis (excluding OpenAI investment impacts), which increased 18% on a year-over-year basis (up 19% in constant currency). The figure beat the Zacks Consensus Estimate by 3.82%. On a GAAP basis, earnings per share were $4.92, up 32% year over year.
Revenues of $92.3 billion increased 19% year over year (up 19% in constant currency) and beat the Zacks Consensus Estimate by 1.88%. The top line came above management's guided range of $89.85-$90.95 billion, with results exceeding the company's expectations across revenues, operating income and earnings per share.
Microsoft Cloud revenues totaled $63.9 billion, up 30% year over year (31% in cc), accelerating from 27% growth in the fourth quarter of fiscal 2026. Commercial remaining performance obligation reached $677 billion, up 73% year over year, with a weighted average duration of 2.3 years. Roughly 30% of this is expected to be recognized as revenue over the next 12 months, up 29% year over year, while the portion recognized beyond 12 months increased 98%. Commercial bookings declined 12% (down 11% in cc), reflecting large Azure commitments in the prior-year quarter, partly offset by a large Azure commitment signed this quarter.
Beginning fiscal 2027, Microsoft reports results under two segments, Agents and Infra and Devices and Consumer, replacing the earlier three-segment structure. The change was announced in September 2026, and prior-period figures have been recast to conform to the new structure.
MSFT's Q1 Segment PerformanceAgents and Infra
The Agents and Infra segment generated $76.8 billion in revenue, which grew 25% year over year (25% in cc).
Azure revenues surged 48% year over year (48% in cc) to $33.2 billion, accelerating from 42% growth in the prior quarter and ahead of the company's expectations, despite delays in some third-party capacity deliveries. Growth was driven by Foundry and improved CPU monetization. Foundry revenues more than tripled year over year, aided by efficiency gains across the GPU fleet that freed up additional capacity for customers, as well as higher revenue per token.
Microsoft 365 Commercial cloud revenues increased 17% on a reported basis (18% in cc), or 18% (19% in cc) when adjusted for a prior-year comparable that had benefited from one point of in-period revenue recognition. Results were ahead of expectations on stronger GitHub Copilot adoption and usage, partially offset by weaker sales execution in Microsoft 365 E3 and stand-alone SKUs. Paid Microsoft 365 commercial seats grew 5%. Average revenue per user growth was led by premium offerings, including Microsoft 365 Copilot, E5 and E7, the latter of which has already reached millions of paid seats.
Microsoft 365 Consumer cloud revenues rose 17% (16% in cc), as the business began lapping the benefit of the prior-year price increase. Total Microsoft 365 cloud revenues were $27.8 billion, up 17%.
Productivity and server licensing revenues declined 3% (down 2% in cc) to $8.4 billion. Industry solutions cloud revenues grew 10%, driven by Dynamics 365 and LinkedIn Talent Solutions, although booking trends continued to moderate. Frontier and support services revenues rose 4% (5% in cc) to $2.1 billion.
Operating income for the segment rose to $40.6 billion from $32.7 billion a year earlier, representing an increase of 24% (25% in cc). Operating margin decreased slightly to 53% as sales mix shifted toward Azure. Microsoft Cloud gross margin was 66%, down year over year.
Devices and Consumer
The Devices and Consumer segment generated $15.5 billion in revenues, down 3% year over year (down 3% in cc), pressured by a steep decline in Windows OEM and devices revenues, partly offset by growth in search and advertising.
Search and advertising revenues, excluding traffic acquisition costs, rose 12%, ahead of expectations on higher volume and rate across LinkedIn, Edge and Bing. Xbox content and services revenues fell 2% (down 1% in cc), as declines in third-party content and Xbox Game Pass were partially offset by growth in first-party content. Windows OEM and devices revenues declined 22%, with Windows OEM revenues down 27% (down 28% in cc) due to a prior-year comparable that benefited from Windows 10 end of support, inventory drawdowns by OEM and channel partners, and weaker PC market demand.
Operating income for the segment increased to $5.4 billion from $5.2 billion a year earlier, up 2% (3% in cc). Operating margin expanded to 35%, aided by lower amortization of intangible assets from the Activision acquisition.
MSFT's Notable Developments in Q1Microsoft announced its biggest Copilot update to date, combining Chat, Cowork, Autopilot and Code into a single unified experience across commercial and consumer users. Copilot daily users increased nearly 50% sequentially and more than five-fold year over year, while the number of customers with more than 50,000 Copilot seats rose more than eight-fold. Customers consuming Copilot credits through usage-based billing grew more than 75% in the quarter. The company did not provide an updated paid Copilot seat count this quarter.
Foundry crossed 120,000 customers, and revenues from open-source models on Foundry increased 10-fold. Microsoft completed pre-training of MAI Base 2, its next first-party base model, and released DecisionOne, a structured decision-making model used by more than 4,000 customers in its first month. Paid Fabric customers reached 44,000, up more than 50% year over year, while more than 50 million agents are now registered in Agent 365, up over 30% sequentially.
On GitHub, agent-generated pull requests increased six-fold over the past six months, and GitHub Advanced Security revenues grew more than 50% year over year. At GitHub Universe, the company announced broad availability of Copilot Fusion, which brings multi-model orchestration to software development.
Microsoft added 24 new data centers across five continents during the quarter, cut dock-to-live times for new GB300 systems in its largest regions by about 20% sequentially and docked its first NVIDIA Vera Rubin GPUs. Its in-house Maia 200 chip is delivering up to 1.7 times more tokens per watt across Teams and Copilot workloads.
LinkedIn surpassed 1.4 billion members, with time spent viewing feed content up 15% year over year. In gaming, Minecraft delivered a record quarter for engagement and revenues. The company also announced an employee voluntary exit offer, the estimated cost of which is included in its second-quarter guidance.
MSFT's Financial Performance in Q1Gross margin reached $62.6 billion, up 17% year over year, with gross margin percentage at 68%.
Total operating expenses increased to $16.6 billion from $15.7 billion, up 6%, driven by continued investments in research and development, compute capacity and talent. Research and development expenses were $9 billion, sales and marketing were $5.7 billion, and general and administrative expenses were $1.9 billion.
Operating income increased 21% year over year (22% in cc) to $45.9 billion, while operating margin expanded slightly to 50%. Net income reached $36.6 billion, up 32% on a GAAP basis. On a non-GAAP basis, excluding OpenAI-related impacts, net income was $36.4 billion, up 18% (19% in cc).
Other income and expense, net, was a positive $38 million in the quarter compared with a negative $3.7 billion a year earlier. Excluding the impact of OpenAI investments, other income and expense was a negative $234 million.
MSFT's Q1 Capital Expenditure and InfrastructureCapital expenditures, including finance leases, were $45.2 billion, below expectations as some anticipated third-party capacity deliveries were delayed. Roughly three-quarters of spending went toward short-lived assets, primarily CPUs and GPUs, including higher memory and storage costs. Finance leases were $7.4 billion, while cash paid for property and equipment was $39.4 billion.
Cash flow from operations totaled $58 billion, up 29% year over year, driven by strong cloud billings and collections. Free cash flow was $18.6 billion, down from $25.7 billion a year ago, reflecting higher capital spending.
As of Sept. 30, 2026, Microsoft had total cash, cash equivalents and short-term investments of $64.5 billion compared with $76.8 billion as of June 30, 2026. Long-term debt was $31.1 billion, with an additional $4.4 billion in the current portion of long-term debt.
Microsoft returned $10.2 billion to shareholders through dividends and share repurchases during the fiscal first quarter.
MSFT's OpenAI Partnership UpdateThe fiscal first quarter reflected net gains from investments in OpenAI of $207 million, adding 3 cents to earnings per share. This compares with the first quarter of fiscal 2026, when net losses from OpenAI investments decreased net income and earnings per share by $3.1 billion and 41 cents, respectively.
These OpenAI-related impacts have historically created volatility in reported GAAP results, leading the company to provide non-GAAP measures excluding these effects to help investors better understand operational performance.
MSFT's Q2 2027 OutlookFor the second quarter of fiscal 2027, Microsoft expects total revenues between $96 billion and $97.1 billion, indicating growth of 18% to 19%. Based on current rates, foreign currency is not expected to have a meaningful impact on revenues, cost of revenues or operating expense growth.
The Agents and Infra segment is expected to generate revenues between $80.1 billion and $80.7 billion, indicating growth of 24% to 25%. Azure revenue growth is projected at 49% to 50% in cc, with demand continuing to exceed available supply and some third-party GPU capacity contracts delayed to the second half of the fiscal year. Microsoft 365 Commercial cloud revenues are expected to grow approximately 19% in cc, while Microsoft 365 Consumer cloud revenues are expected to grow in the low teens. Microsoft Cloud gross margin is expected to be roughly 65%.
The Devices and Consumer segment is expected to generate revenues between $15.9 billion and $16.4 billion. Search and advertising revenue growth, excluding traffic acquisition costs, is expected in the low double digits, and Xbox content and services revenues are expected to grow in the mid-to-high single digits depending on the timing of first- and third-party content launches. Windows OEM and devices revenues are expected to decline in the mid-30s percentage range.
Cost of revenues is projected between $32.7 billion and $32.9 billion, up 26% to 27%, while operating expenses are expected between $18.5 billion and $18.6 billion, up 9%. Operating margin is expected to decline slightly year over year. Excluding any impact from OpenAI investments, other income and expense is expected to be roughly negative $300 million, and the effective tax rate is projected at approximately 20%.
Capital expenditures are expected to exceed $50 billion in the second quarter. Given the third-party capacity delays, Microsoft now expects calendar 2026 capital spending of approximately $170 billion, with spending expected to accelerate in the second half of fiscal 2027. The company expects to remain free cash flow positive in fiscal 2027.
MSFT’s Zacks Rank and Stocks to ConsiderCurrently, Microsoft carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Analog Devices (ADI - Free Report) , Applied Materials (AMAT - Free Report) and Cisco Systems (CSCO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have rallied 54.4% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $13.00 per share, up by a penny over the past seven days, indicating an increase of 66.9% year over year.
Shares of Applied Materials have jumped 54.5% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.79 per share, unchanged over the past 30 days, indicating a rise of 35.8% year over year.
Cisco Systems shares have surged 45.3% year to date. The Zacks Consensus Estimate for CSCO’s fiscal 2027 earnings is pegged at $5.11 per share, unchanged over the past 30 days, indicating an increase of 18% year over year.
Microsoft Corporation (NASDAQ:MSFT) shares were trading lower Thursday after the company beat analyst estimates for its fiscal first quarter a day earlier. Here’s a look at what analysts liked about the earnings report and why most are raising their price targets on the stock.
The Microsoft AnalystsScotiabank analyst Patrick Colville reiterated a Sector Outperform rating on Microsoft and raised the price target from $625 to $650.
KeyBanc analyst Jackson Ader maintained an Overweight rating and raised the price target from $600 to $630.
DA Davidson analyst Gil Luria reiterated a Buy rating and raised the price target from $550 to $650.
Cantor Fitzgerald analyst Thomas Blakey maintained an Overweight rating and raised the price target from $608 to $630.
JPMorgan analyst Samik Chatterjee reiterated an Overweight rating with a price target of $625.
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Scotiabank on MSFT StockAzure growth was the key highlight for Colville in the first quarter. The analyst also highlighted the company’s lighter than expected capex.
"Based on our short-lived capex analysis, we estimate Azure can grow in an upside case 54% in 2Q," Colville said.
Colville highlighted Microsoft receiving more than $2.50 in incremental AI revenue for every $1 of AI depreciation.
"We see this print as evidence that the company is a leading horseman of the AI revolution."
KeyBanc on MSFT StockAzure, Copilot and Capex were the three focus areas for Ader in results and they all outperformed.
"The three key areas that we are focused on all showed meaningful upside, and the momentum in those areas is expected to continue for the remainder of the year," Ader said.
DA Davidson on MSFT StockLuria sees Microsoft’s first quarter having wins for both the software and infrastructure AI offerings.
"Copilot continued to gain adoption, and Azure continued to show accelerating growth," Luria said.
The analyst said Microsoft expects to remain free cash flow positive despite its large capex spending.
Cantor Fitzgerald on MSFT StockAzure accelerating despite capacity constraints was the highlight from the first quarter for Blakey.
"We view the quarter as further validation of Microsoft’s AI-led growth opportunity, while continuing to monitor capacity delivery timing, cloud margin pressure from Azure mix and component costs inflation, and the ability to sustain infrastructure returns as investment accelerates," Blakey said
The analyst expects Microsoft to be a "leading beneficiary" for AI intelligence in the enterprise sector.
"With AI investment continuing to scale, we are watching whether efficiency gains and improved monetization can increasingly offset infrastructure costs and support margin stabilization over time."
JPMorgan on MSFT StockChatterjee highlights Azure acceleration and Microsoft’s capital needs being favorable to peers after Q1 results.
"Microsoft delivered a print and outlook that should reinforce the bull thesis around compute efficiencies supporting a broad-based acceleration in growth," Chatterjee said.
The analyst said the strong numbers and forward upside show Microsoft’s ability to balance its compute allocation across multiple growth drivers.
Microsoft Stock Price ActionMicrosoft shares were down 1.4% to $523.48 on Thursday versus a 52-week trading range of $349.20 to $551.15. Shares traded higher in the earlier trading session before declining. Microsoft stock is up 10.7% year-to-date.
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Key Takeaways MongoDB's upgraded fiscal 2027 outlook and long-term targets strengthen its position as an AI data platform.MDB targets 20% revenue growth and mid-20% Atlas growth, with limited capital spending and expanding margins.Microsoft faces rising AI infrastructure costs and cloud margin pressure, limiting near-term upside.
Microsoft (MSFT - Free Report) and MongoDB (MDB - Free Report) are both positioning their platforms at the center of enterprise artificial intelligence (AI) adoption. Microsoft monetizes AI through Azure, Foundry and Copilot, while MongoDB powers AI applications through its Atlas platform and Enterprise Advanced offering.
The two also compete directly, as Microsoft’s PostgreSQL, SQL Database and Cosmos DB services vie with MongoDB for the operational data workloads that feed AI agents. With both updating outlooks and launching agentic AI tools, the comparison is timely.
Let’s delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.
The Case for MSFT StockMicrosoft’s AI strategy is gaining traction as its business model expands from per-seat subscriptions to consumption-based pricing. In October 2026, the company introduced the new Copilot, unifying Chat, Cowork, Autopilot and code in one experience, brought Office into the Copilot app and made Microsoft 365 E7 and Agent 365 generally available. At GitHub Universe, it launched Copilot Fusion, which routes coding tasks across multiple models. Commercial remaining performance obligation of $677 billion provides solid long-term revenue visibility.
For the second quarter of fiscal 2027, Microsoft expects revenues of $96-$97.1 billion, indicating 18-19% year-over-year growth. Azure revenues are expected to grow 49-50% in constant currency, while Microsoft 365 Commercial Cloud is projected to grow roughly 19%.
However, this growth comes at a steep cost. Microsoft expects second-quarter capital expenditure to exceed $50 billion, with 2026 spending of approximately $170 billion and further acceleration in the second half of fiscal 2027. Demand continues to exceed available supply, and some third-party GPU capacity deliveries have been pushed to the second half. Microsoft Cloud gross margin is expected to decline to roughly 65% due to a higher Azure mix, while operating margin is expected to dip slightly year over year.
The Devices and Consumer business remains a drag, with Windows OEM and devices revenues expected to decline in the mid-30s percent range due to elevated inventory, weak PC demand and a tough Windows 10 comparison. Although free cash flow is expected to stay positive in fiscal 2027, rising capital intensity limits near-term upside.
The Zacks Consensus Estimate for MSFT’s fiscal 2027 earnings is pegged at $19.66 per share. The estimate indicates 9.53% year-over-year growth.
The Case for MDB StockMongoDB is emerging as the intelligent data platform for the AI era. At its Investor Day on Sept. 29, 2026, the company launched MongoDB 9.0, delivering up to 2x higher throughput, along with Atlas Infinite, a new deployment option that separates compute from storage for AI-scale demand and Atlas Agent Engine, which unifies governance, memory and retrieval for running AI agents in production. MongoDB also launched the Atlas Managed MCP Server, connecting coding agents to live Atlas data, and made Search and Vector Search generally available in Enterprise Advanced.
These innovations are backed by a strong outlook. MongoDB raised its fiscal 2027 guidance and now expects revenues of $2.99-$3.03 billion, non-GAAP operating income of $616.3-$636.3 million and non-GAAP earnings of $6.39-$6.58 per share, with the second-half raise mainly driven by Atlas. For the third quarter, revenues are expected to be in the range of $756-$761 million.
At Investor Day, MongoDB also raised its long-term targets, now aiming for 20%+ total revenue growth and mid-20% Atlas growth over roughly three years, along with 100-200 basis points of average annual operating margin expansion. Remaining performance obligations surged 91% year over year to $1.52 billion, reflecting rising multi-year commitments.
MongoDB’s asset-light model is a key advantage, as it does not shoulder Microsoft-scale capital spending. With $2.4 billion in cash and investments, the company continues to actively repurchase its shares.
The Zacks Consensus Estimate projects 2026 earnings of $6.50 per share, representing a substantial 30.78% year-over-year growth. The earnings estimates have been revised upward over the past 30 and 60 days.
Valuation and Price Performance ComparisonBoth MSFT and MDB trade at premium valuations. In terms of forward 12-month Price/Sales (P/S), MSFT trades at 9.52X, while MDB trades at 9.19X. MDB’s premium is justified as its guidance calls for 20%+ long-term revenue growth, steady margin expansion and minimal capital spending, while MSFT’s multiple already prices in AI optimism amid soaring capital expenditure and margin pressure, making it prudent to wait.
MSFT vs. MDB: P/S F12M Ratio
Image Source: Zacks Investment Research
On price performance, MSFT shares have returned 9.8% over the year-to-date period, while MDB shares have lost 6.3%. MDB’s pullback offers investors an attractive entry point, as its raised long-term targets signal that fundamentals remain intact.
MSFT Outperforms MDB Year to Date
Image Source: Zacks Investment Research
ConclusionMongoDB holds an edge over Microsoft on several fronts. MDB benefits from a raised fiscal 2027 outlook, upgraded long-term targets of 20%+ revenue growth, expanding margins and an asset-light model that converts growth into free cash flow. Recent launches, including MongoDB 9.0, Atlas Infinite and Atlas Agent Engine, strengthen its AI positioning, while a lower forward P/S multiple and year-to-date share price decline offer a compelling entry point. Microsoft’s AI momentum is solid, but soaring capital expenditure, declining cloud gross margin and Windows weakness limit upside. Investors should buy MDB now and wait for a better entry point for MSFT. MSFT currently carries a Zacks Rank #3 (Hold), whereas MDB has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Microsoft Corp. (NASDAQ:MSFT) remains in focus after stronger-than-expected quarterly results and guidance reinforced confidence in Azure and enterprise software growth, while analysts continue to debate the scale and returns of its AI infrastructure spending.
Key Takeaways Microsoft shares gained 4% after fiscal Q1 2027 earnings and revenues beat consensus estimates.MSFT's cloud revenues grew 30%, while capital spending rose 29.5%, pressuring free cash flow.ETFs including FTEC offer diversified tech exposure, with MSFT holdings ranging from 11.18% to 14.63%.
Shares of software giant Microsoft (MSFT - Free Report) rose 4% in yesterday’s extended trading session (as cited in CNBC), following the company’s better-than-expected first-quarter fiscal 2027 results. The company added 24 new data centers across five continents in the fiscal first quarter, thanks to accelerating demand. This expansion is expected to remain a key long-term growth catalyst for MSFT.
However, the company’s capital expenditure, a metric that has been worrying investors across the market in recent times, went up 29.5% year over year to $45.2 billion and subsequently dragged down its free cash flow by 27% from the prior-year level.
While management expects free cash flow to remain positive in fiscal 2027, persistent pressure on cash generation could temporarily constrain Microsoft’s financial flexibility. If sustained, this friction could even limit the company’s capacity for future infrastructure investments or raise leverage concerns among risk-averse investors — even as new data centers drive near-term revenue growth.
Against this backdrop, investors seeking exposure to Microsoft’s leadership in cloud computing — without absorbing the single-stock risk of its declining cash flow — should consider exchange-traded funds (ETFs) with significant MSFT holdings. This approach captures Microsoft’s upside while maintaining broad technology diversification.
Before exploring our top ETF picks, let us examine Microsoft’s fiscal first-quarter performance across key metrics to help investors make well-informed decisions.
A Brief Analysis of MSFT’s Q1 ResultsMicrosoft’s fiscal first-quarter adjusted earnings per share (EPS) beat the Zacks Consensus Estimate by 3.8%, while its revenues topped the consensus mark by 1.9%. The company delivered strong year-over-year results, with both revenues and earnings registering double-digit growth.
Segment-wise, revenues from MSFT’s Agents and Infra units grew 25%, backed by strength across the connected layers of its platform. Nevertheless, commercial bookings fell 12%, primarily due to tough year-over-year comparisons stemming from large Azure commitments in the prior-year period.
Revenues from its Devices and Consumer segment dropped 3% year over year, primarily on account of a 22% slump in its Windows OEM and Devices revenues.
As far as Microsoft’s cloud business is concerned, revenues improved 30%, backed by strong demand across Azure and M365 Commercial Cloud platforms. Azure revenues increased 48%, driven by Foundry and improved CPU monetization. M365 Commercial Cloud revenues rose 18%, driven by stronger GitHub Copilot adoption and usage.
In relation to its shareholder-friendly moves, Microsoft returned $10.2 billion to its stakeholders in the form of dividends and share repurchases in the first quarter of fiscal 2027.
Microsoft expects to witness healthy growth in its commercial bookings in the fiscal second quarter. However, quarterly growth is expected to reflect lumpiness due to large Azure commitments secured a year ago.
Business-wise, Microsoft expects M365 Commercial Cloud revenues to grow roughly 19% in constant currency (with minimal foreign exchange impact), driven by rising ARPU, seat additions, and strong traction in premium and usage-based offerings.
Its Devices and Consumer segment is projected to generate $15.9 billion to $16.4 billion in revenues in the fiscal second quarter, with search and advertising revenue (ex-TAC) forecasted to expand in the low double digits on steady volume and rate growth. Additionally, Xbox Content and Services is expected to grow in the mid-to-high single digits.
Microsoft-Heavy ETFs to BuyGlobal X PureCap MSCI Information Technology ETF (GXPT - Free Report)
This fund, with net assets worth $140.8 million, offers exposure to 85 U.S.-listed companies classified within the Information Technology sector under the Global Industry Classification Standard. Of these, Microsoft carries the third spot, holding 14.63% of the fund.
GXPT has rallied 26.3% year to date. The fund charges 15 basis points (bps) in fees and traded at a volume of 0.02 million shares in the last trading session.
iShares U.S. Technology ETF (IYW - Free Report)
This fund, with net assets worth $25.13 billion, includes 148 software, semiconductors and tech hardware companies. Of these, Microsoft carries the third spot, holding 13.07% of the fund.
IYW has surged 29% year to date. The fund charges 37 bps in fees and traded at a volume of 0.85 million shares in the last trading session.
This fund, with net assets worth $246.2 million, offers exposure to 77 information technology-related companies. Of these, Microsoft carries the fourth spot, holding 11.89% of the fund.
TRUT has rallied 23.9% year to date. The fund charges 14 basis points (bps) in fees and traded at a volume of 0.15 million shares in the last trading session.
Fidelity MSCI Information Technology Index ETF (FTEC - Free Report)
This fund, with net assets worth $22.15 billion, includes 298 information technology stocks. Of these, Microsoft carries the third spot, holding 11.18% of the fund.
FTEC has risen 31.3% year to date. The fund charges 8 bps in fees and traded at a volume of 0.31 million shares in the last trading session.
A global memory shortage is doing something no software competitor has managed: shrinking Microsoft's Windows business faster with each passing quarter, and the damage is spreading beyond PC makers into the data centers powering Microsoft's own AI ambitions.
Microsoft (NASDAQ:MSFT | MSFT Price Prediction) said on October 28, 2026, that its Windows business will shrink faster in the December quarter than in the September quarter it had just reported. The stock closed at $531.01 before the results. It then rose 2.90% to $546.39 in after-hours trading as of about 7:59 p.m. ET, because cloud strength offset the Windows warning.
In this case, Windows sales means Windows OEM revenue, which is the license fees Microsoft collects from PC makers such as HP (NYSE:HPQ) and Dell Technologies (NYSE:DELL). That revenue moves with PC unit sales. The memory shortage that is pressuring those PC makers also raises what Microsoft pays to build data centers.
Microsoft’s Windows Guidance Deepens to a Mid-30s Decline Devices and Consumer revenue was $15.5 billion, and Windows OEM and devices revenue fell 22%. That roughly matched the low-20s decline CFO Amy Hood guided for on July 29, 2026.
The Windows OEM line by itself missed. Amy Hood said it fell 27%, or 28% in constant currency (excluding exchange-rate moves), the same rate Counterpoint Research expects PC shipments to fall in the December quarter. She said it was “below expectations” and pointed to “the Windows 10 end of support demand in the prior year, inventory drawdowns by OEM and channel partners and weaker PC market demand.” The first cause is a tough comparison, since a year earlier buyers rushed to upgrade as Windows 10 support ended.
For the December quarter, Amy Hood said “Windows OEM and devices revenue should decline in the mid-30s” and guided Devices and Consumer revenue to $15.9 billion to $16.4 billion. She added, “We expect these trends to continue through the rest of the fiscal year.”
How Memory Prices Led PC Makers to Overstock Before the Slump The link to memory comes from Hood’s earlier comments. In January 2026, she highlighted “the potential impact on the PC market from increased memory pricing,” and on July 29, she said partners were building inventory “given increasing component prices.”
PC makers stocked up ahead of price hikes and are now selling down that inventory. That helps explain why Amy Hood’s guided decline deepened from the low 20s to the mid-30s.
Ben Yeh, a principal analyst at Omdia, said memory’s share of PC costs has risen from roughly 15% to nearly 40%. That cost squeeze cut September-quarter PC shipments 21% to 57 million, Counterpoint Research counted, with HP falling 31% and Dell 25%; it expects another 27% drop in the December quarter. Its senior analyst, Minsoo Kang, said: “rising memory and component costs push system prices higher and force consumers to delay replacement purchases.”
PC makers have been slipping, with HP down 3.37% to $32.45 in the October 28 regular session, and Dell slipped 1.63% to $493.79. Intel (NASDAQ:INTC) rose 1.91% to $95.53, then dropped 2.55% to $93.09 after hours as of about 7:59 p.m. ET. Intel is expected to report on October 29, and HP and Dell are expected to report around November 24, although none of the three has confirmed its date.
Memory Costs Hit Microsoft in Both Windows and Data Centers Amy Hood said about three-quarters of September-quarter capital spending went to short-lived assets, “primarily CPUs and GPUs, including higher memory and storage costs.” The same shortage that is cutting into Windows licensing also raises Microsoft’s data-center costs.
Microsoft’s results still held up because Devices and Consumer is the smaller of its two segments. That data-center spending is going toward meeting AI demand from paying customers, and the suppliers wiring up those facilities, from power to cooling to networking, are the quieter beneficiaries of the same expansion (we covered seven of them in a free report on the AI infrastructure trade).
What Could Move MSFT Stock After This Windows Warning A deeper Windows decline reduces a high-margin license stream, but it leaves the cloud business that drives Microsoft’s growth intact. A bottom in Windows would show up as partner inventories return to normal, memory prices ease, and the Windows 10 comparison drops out of the numbers.
If the December-quarter earnings report shows Windows OEM and devices revenue falling further than Amy Hood’s mid-30s guide, the bullish case for Microsoft weakens. A close below $531.01 on October 29 would also suggest the market weighs Windows more heavily than the after-hours gain implied.
Contact [email protected] for any questions or corrections.
Microsoft shares MSFT fell on Thursday, reversing early gains and premarket strength, as investors assessed the company's latest earnings, capital spending plans, and intention to raise $25 billion through a US bond offering. The stock declined despite Microsoft reporting stronger-than-expected fiscal first-quarter results, with revenue rising 19% year over year to $92.28 billion.
Microsoft is looking to raise at least $25 billion from its first US investment-grade bond offering in nearly a decade, according to people familiar with the matter. Bloomberg Intelligence's Robert Schiffman discusses how this reinforces his view that AI spending will keep growing.
Bloomberg's Ed Ludlow breaks down Alphabet's weak search and ad sales which raised new fears that AI is eating into Google's core business and caused a record market cap wipeout. Plus, Bloomberg reports Microsoft is looking to tap the bond market for the first time since 2017, seeking at least $25 billion to support spending as AI cloud growth soars.
Download this episode on Apple Podcasts, Spotify or listen below:
Amazon earnings preview (0:25) Google concerns, Microsoft's good cash flow (1:40) Inflation data, FOMC surprise (3:30)
Transcript
Rena Sherbill: Welcome back to our wonderful tech editor from our wonderful news team, Mr. Chris Ciaccia.
Let's get into it. A lot of earnings on the table. I imagine that's top of mind for you this morning.
Chris Ciaccia: Yeah, absolutely. We had a rush of earnings last night, with Microsoft (MSFT) and Google (GOOG) (GOOGL) or Alphabet being the two big names there, and then we've got Amazon (AMZN) tonight, and it's just a deluge of earnings, and so it's head down for me and my team, and I would imagine most reporters as well, this earnings season.
For Amazon, I mean the big focus is always gonna be AWS, right? Their retail business is strong. It's bigger than Walmart's (WMT) now.
So we should see some growth there given that we've had some successful prime days in the past, and I'm sure we'll hear more about what they have planned for Black Friday in the coming weeks. but the stock generally moves on AWS.
And given that we've saw strong growth in Azure and Google's cloud unit, I would expect the same for Amazon given that it's the leader in the industry.
But as far as the stock is concerned, it all comes down to cash flow.
Microsoft's shares were up because their cash flow numbers were good.
Google's shares were down sharply because cash flow is is dropping. and there's some other issues related to Google, but for Amazon it's all about cash flow.
Rena Sherbill: What would you say about Google? We saw that stocks were deeply in the red after Google and other tech stocks declined sharply after some earnings disappointments. What would you add for Google? What would you add for Microsoft?
Chris Ciaccia: For Google, I think this is a quarter that gives a lot of credence to the bear thesis.
Now I'm not sure whether that's actually gonna wind up playing out in the long term or not, but I mean there's a lot of concerns right now.
We saw search revenues decelerate even though they said queries are at their highest levels in five years, it's not translating to revenue so there's concerns that AI is hitting the lunchbox for Google when it comes to search, which has been their bread and butter.
Consumers like you and me and others are going to Chat GPT and Gemini and other chatbots for their search queries and they're not using the ten blue links.
Now Gemini is this massive win for Google, but it hasn't translated to revenue just yet. So that's an execution issue that Google is going to need to solve.
For Microsoft it's a completely different situation. Their Azure unit grew sharply. That's been super surprising and super impressive to watch.
The stock was up sharply and it's given a little bit some of back some of those gains this morning. I think maybe on Google probably weighing on the market, plus Microsoft also disclosed this morning that they are going to do a bond offering, and that could have some issues.
But their cash flows are good. They are well positioned, when it comes to AI, they're generating even more revenue from the revenue share from OpenAI (OPENAI) and people are surprised and impressed about how resilient its software business is.
And I think once the dust settles, you'll see the long term uptrend resume in Microsoft.
Rena Sherbill: We also saw the core PCE price index increase point three percent month over month in September. Just wanted to highlight this line from Heather Long, who is the chief economist at Navy Federal Credit Union.
Bottom line inflation is back near a three year high. It's largely due to war in Iran, but there's legitimate concern that inflation is spreading beyond energy.
We also saw initial jobless claims unexpectedly slip in the past week. US GDP grew more than what was estimated in Q3. Of course, everybody knows that the FOMC held its benchmark interest rate yesterday as widely expected.
Anything else to add to the macro or the micro today, Chris?
Chris Ciaccia: I was a little bit surprised yesterday watching the FOMC meeting, that Kevin Warsh does not seem too hard pressed to to bring down inflation.
I mean, they've mentioned that they're gonna they want to do it and they're gonna bring back s price stability, but it's still kind of question as to why not raise in October.
We saw the CME Fed watch. Going into the meeting, pricing odds that they weren't going to raise, that they needed more time to bring down, they need more data and more time.
But I'm not sure exactly what they're waiting for. The data has not been great, at least from my perspective. And this morning's data kind of hits that too.
So I would not be surprised if we get more data that is trending in the wrong direction if the Fed feels that maybe a fifty point basis rate hike in sept in December is the way to go as opposed to just twenty-five.
The other issue that I would call out is that he was adamant that politics do not play a role in their thinking and I tend to believe that, but I also think that given the fact that we are so close to the midterm elections, it just doesn't pass the smell test when it comes to whether there was political motivations there.
Like I said, I don't think there were, but the optics there are not great.
Stephanie Walter with HyperFRAME Research says the most interesting takeaway from Microsoft (MSFT) earnings is how it can extend AI revenue opportunities beyond Azure cloud. She adds that existing partnerships offer a wide moat to maximize opportunities through evolving tech.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Key Takeaways Nokia appears better positioned than Ericsson, with stronger 2026 growth prospects and stock performance.NOK's 2026 sales and EPS are projected to rise 5% and 18.2%.Nokia shares gained 29.3% in a year versus Ericsson's 9.1%, but trade at a higher forward price/sales ratio.
Ericsson (ERIC - Free Report) and Nokia Corporation (NOK - Free Report) are key players in the telecommunications infrastructure market, particularly 5G networks, radio access equipment and emerging AI-powered network technologies. Ericsson is well-positioned to capitalize on the market momentum with a competitive 5G product portfolio. With a holistic growth focus, the company strives to be the leading telecommunications infrastructure provider worldwide and establish a focused enterprise business.
Nokia is a premier telecommunications equipment provider, supporting businesses’ digital transformation at the network edge through both 5G connectivity and cloud-native applications and capabilities. It has been developing its 5G portfolio, strengthening AirScale and advancing the capabilities of its ReefShark chipset. Nokia’s extensive portfolio consists of around 20,000 patents, among which 7,000 are essential for 5G.
With domain-specific expertise in core areas, both Ericsson and Nokia are well-positioned to cater to the evolving network connectivity demands of business enterprises. Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.
The Case for ERICEricsson is focusing on 5G system development and has undertaken many notable endeavors to position itself for market leadership in 5G. It currently has 206 live 5G networks across the globe, spanning 85 countries. The company believes that the standardization of 5G is the cornerstone for digitizing industries and broadband. The deployment of 5G networks is likely to boost the adoption of IoT (Internet of Things) devices, with technologies like network slicing gaining more prominence.
Ericsson continues to invest in the Enterprise business to make it a sizeable part of its business. The company has introduced on-demand network slicing capability in Android 14 devices. It empowers developers to enhance the flexibility of applications and allows service providers to better align network connectivity with user-specific requirements. Ericsson continues to prioritize the terms and value of new agreements and renewals. Management also identifies opportunities to increase smartphone market penetration and extend licensing into additional segments.
However, rising component costs represent a continuing challenge for Ericsson's profitability and pricing competitiveness. Management expects the global radio access network market to remain flat in 2026, constraining opportunities for broad-based industry expansion. Management has identified component cost increases as a margin headwind for 2027. Ericsson is pursuing pricing actions, portfolio optimization and operational efficiencies to mitigate these costs. The ability to offset inflation remains important in a flat network equipment market, where opportunities to recover higher expenses through volume growth may be limited.
The Case for NOKNokia facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation needed to support dynamic operations, reduce complexity and improve efficiency. The company seeks to expand its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets.
Its installed base of high-capacity AirScale products, which enables customers to quickly upgrade to 5G, is growing fast. The company is driving the transition of global enterprises into smart virtual networks by creating a single network for all services, converging mobile and fixed broadband, IP routing and optical networks with the software and services to manage them. Leveraging state-of-the-art technology, Nokia is transforming the way people and things communicate and connect. These include a seamless transition to 5G technology, ultra-broadband access, IP and Software Defined Networking, cloud applications and the Internet of Things.
Nokia is reportedly the only global supplier offering Open Radio Access Network (O-RAN) with commercial 5G Cloud-RAN networks. The company intends to accelerate strategy execution, sharpen customer focus and reduce long-term costs. At the same time, it is focused on building a strong, scalable software business and expanding it to structurally attractive enterprise adjacencies. Nokia’s C-Band portfolio supports 5G standalone and non-standalone networks, cloud-based implementations and O-RAN products.
However, Nokia remains exposed to the cyclical nature of telecommunications infrastructure spending, which can create uneven revenue and profitability across investment cycles. While AI and cloud demand is supporting Optical Networks and IP Networks, carrier spending remains mixed across regions and business lines. Although the company continues to strengthen its AI-native networking portfolio and expand relationships with hyperscale cloud providers, competitors are pursuing similar opportunities across 5G, AI infrastructure and future 6G deployments. Maintaining technology leadership while preserving pricing discipline remains essential as customers balance network modernization against capital spending constraints.
How Do Zacks Estimates Compare for ERIC & NOK?The Zacks Consensus Estimate for Ericsson’s 2026 sales implies a year-over-year decline of 1.6%, while that for EPS indicates a fall of 5.9%. EPS estimates have trended up 4.9% on average over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Nokia’s 2026 sales suggests year-over-year growth of 5%, while that for EPS implies a rise of 18.2%. The EPS estimates have remained static over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of ERIC & NOKOver the past year, Ericsson has surged 9.1% against the industry’s fall of 0.6%. Nokia has gained 29.3% over the same period.
Image Source: Zacks Investment Research
Nokia looks more expensive compared to Ericsson from a valuation standpoint. Going by the price/sales ratio, Ericsson’s shares currently trade at 1.59 forward sales, lower than 2.1 for Nokia.
Image Source: Zacks Investment Research
ERIC or NOK: Which is the Better Pick?Both Ericsson and Nokia carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nokia expects sales and earnings to improve in 2026, unlike Ericsson. In terms of price performance, Nokia has outperformed Ericsson, although it is trading relatively more expensively compared with the latter. Although there is not much to choose from, Nokia appears to be slightly better placed than Ericsson at the moment and is therefore a better investment option now.
Key Takeaways Alibaba Cloud's external revenues surged 45%, its fastest growth in 22 quarters, on strong AI demand.Alibaba's AI product revenues reached RMB12.4 billion after 12 straight quarters of triple-digit growth.Alibaba's cloud adjusted EBITA jumped 133%, but a 75% capex surge and U.S. rivals could challenge growth.
Alibaba (BABA - Free Report) Cloud's external revenues surged 45% year over year in the June quarter of 2026, the fastest growth in 22 quarters, reflecting robust demand for artificial intelligence (AI) infrastructure. AI Cloud and Compute Services revenues increased 45% to RMB48.4 billion ($7.14 billion), driven by compute, storage, Model-as-a-Service (MaaS) and AI applications.
AI-related product revenues reached RMB12.4 billion, marking the 12th consecutive quarter of triple-digit growth. These products accounted for 35% of external cloud revenues, with an annualized revenue run rate exceeding RMB49.5 billion. Annual recurring revenues from model and application services, including MaaS, surpassed RMB16 billion as of August.
Cloud profitability is improving alongside growth. AI Cloud and Compute Services adjusted EBITA jumped 133% to RMB5.63 billion, with a margin of approximately 11.6%. Higher-margin AI products, stronger pricing power and better resource utilization could support further expansion.
Alibaba's proprietary T-Head Zhenwu chips already serve more than 650 external customers, potentially reducing reliance on expensive third-party processors. Its Qwen models and QwenWork enterprise agent could also drive recurring demand for cloud computing.
Yet sustaining this momentum comes with challenges. Capital expenditures surged 75% to RMB67.7 billion, contributing to a RMB44.7 billion free-cash-flow outflow. Rising chip prices, supply constraints and geopolitical restrictions could complicate expansion. Nevertheless, accelerating AI adoption, growing MaaS revenues and improving cloud margins suggest that Alibaba can sustain strong cloud revenue growth, provided its substantial infrastructure investments generate adequate returns.
How Does Alibaba Compare With U.S. Cloud Rivals?Microsoft (MSFT - Free Report) remains a formidable rival in enterprise cloud infrastructure. In the first quarter of fiscal 2027, Azure revenues grew 48%, while Microsoft Cloud revenues rose 30% to $63.9 billion. Microsoft's worldwide data-center footprint and enterprise software relationships support customer retention and AI cross-selling, challenging Alibaba's ability to win multinational cloud workloads.
Alphabet (GOOGL - Free Report) poses another challenge through Google Cloud. In the third quarter of 2026, Alphabet's Google Cloud revenues surged 103% to $30.7 billion, fueled by enterprise AI infrastructure, AI solutions and TPU systems. Alphabet's in-house chips, Gemini models and global cloud reach support its rapidly scaling AI services, intensifying competition for high-value enterprise workloads that Alibaba is targeting.
BABA’s Share Price Performance, Valuation & EstimatesBABA’s shares have declined 31.1% year to date compared with the industry’s fall of 0.7%.
BABA’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, BABA is currently trading at a trailing 12-month price-to-sales ratio of 2.14, above the sector’s average of 1.73. The company carries a Value Score of B.
BABA’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 and 2028 EPS has been revised downward over the past 30 and 60 days. The company has also missed earnings expectations in each of the trailing four quarters, with an average negative surprise of 45.59%.
Image Source: Zacks Investment Research
Alibaba currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Two AI chip giants, one $10,000 stake each, and a five-year model that puts them on surprisingly different trajectories. The gap has nothing to do with which company is bigger.
Put $10,000 into Advanced Micro Devices (NASDAQ:AMD | AMD Price Prediction) and another $10,000 into NVIDIA (NASDAQ:NVDA), and our price-prediction model has the two stakes ending up in very different places by 2030.
In early trading, AMD sat at $546.66 and NVIDIA at $215.69. The model starts from reference prices of $531.29 and $210.96. Both companies sell into the same AI data center expansion.
The gap between them comes down to how much growth each stock’s price already reflects.
What $10,000 Could Become in Each Stock The model’s closest horizon to 2030 is its five-year target, which runs to October 2031, so every specific number below is linked to that window and 2030 serves as an illustrative label.
In the base case, $10,000 in NVIDIA could be worth about $18,056, a total return of 80.56%, built on a per-share target of $380.90. The same $10,000 in AMD could grow to about $11,989, a total return of 19.89%, on a target of $636.99.
As an illustration, the base-case tracks pass through about $352.11 for NVIDIA and $597.12 for AMD in October 2030. The model rates its confidence at 0.9 for both stocks.
NVIDIA Scenarios (Five-Year Horizon) Scenario Target Price Total Return Value of $10,000 Bull $378.63 79.48% $17,948 Base $380.90 80.56% $18,056 Bear $268.57 27.31% $12,731 AMD Scenarios (Five-Year Horizon) Scenario Target Price Total Return Value of $10,000 Bull $999.74 88.17% $18,817 Base $636.99 19.89% $11,989 Bear $422.13 -20.55% $7,945 NVIDIA’s bull and base cases land almost on top of each other, which makes its outcome range narrower. AMD has the highest single upside in either table and is also the only stock whose bear case loses money.
Why NVIDIA’s Base Case Runs Higher On valuation, NVIDIA trades at about 16x forward earnings. AMD trades at about 43x after a year-to-date rally of 155.26%, compared with NVIDIA’s 15.92%. The model calls AMD “near fair value (2.2%)” and flags “strong upside (+21.6%)” for NVIDIA over one year.
NVIDIA also adds scale. Fiscal second-quarter revenue reached $96.22B (+105.8% YoY), Data Center revenue was $89.02B, and third-quarter guidance calls for $108B ±2%.
Management expects fiscal 2028 revenue to grow approximately 70% even with supply constraints. Revenue per gigawatt rises to $40 billion with Vera Rubin. Analysts put their consensus target at $328.95, with 95% bullish view.
AMD’s Path to the Bull Case AMD’s growth curve is steeper, and its bull case depends on it. Second-quarter revenue rose to $11.54B (+50.1% YoY), and Data Center sales hit $6.72B (+107% YoY). Management expects Data Center revenue to “more than double year-over-year in 2027“, helped by the Helios ramp and an Anthropic deal for up to 2 GW of MI450.
Analysts’ consensus target is $637.61, with 80% bullish view. Both chipmakers also appear in reports about the AI-related stock offering from Meta Platforms (NASDAQ:META), as they compete against custom chips (Barron’s).
Risks That Could Shrink Either Stake Volatility: AMD’s beta is 2.454 and NVIDIA’s is 2.216. AMD fell 13.32% over the past month alone. China and export controls: NVIDIA’s guidance assumes no Data Center compute revenue from China, and AMD has the same regulatory exposure. Margins and supply: NVIDIA expects gross margin to bottom at 71% to 72% in the fourth quarter because of memory costs. Both companies depend on Taiwan Semiconductor (NYSE:TSM). Execution: AMD’s Gaming revenue fell 31%, and its AI story depends on Helios and ROCm continuing to gain adoption. Where the Two Stakes Could Land by 2030 Across the five-year scenarios, $10,000 in NVIDIA runs from $12,731 to $18,056. AMD runs from $7,945 to $18,817.
NVIDIA offers a steadier projected tracks, while AMD has the wider spread of outcomes. The model projections here serve research purposes, and actual results could look very different.
Contact [email protected] for any questions or corrections.
An Nvidia spokesperson on Thursday pushed back on a New York Times report that detailed American intelligence agencies surveilling a person close to Nvidia CEO Jensen Huang because they thought she could be a Chinese intelligence asset.
According to the Times report, which cited people briefed on intelligence surveillance, Alice Huang, who is linked to the Singapore-based cloud Megaspeed, developed a close relationship with Nvidia's Jensen Huang.
Intelligence agencies worried that she was a spy, helping the Chinese government gain information from Nvidia and Jensen Huang, and fretted that Nvidia's CEO had access to President Donald Trump.
The Nvidia spokesperson pushed back on the story in a statement to CNBC, saying that Singapore-based Megaspeed is another one of the company's regional cloud customers, and that Jensen Huang's interactions with its officials are not unusual, because he speaks with thousands of customers every year.
The spokesperson added that customers don't get access to Nvidia trade secrets or relevant national security information.
The report also alleged that Megaspeed was previously suspected of helping companies evade U.S. export controls on Nvidia's AI chips, which aren't allowed to be shipped to China.
Nvidia said that Megaspeed had already been investigated for evading export controls.
"The diversion allegations against this regional cloud were thoroughly investigated and debunked last year," the spokesperson said in a statement.
Nvidia implied that the U.S. government had not briefed Nvidia on Alice Huang.
"We're confident that if the U.S. government believes that any person is a threat to American industry, it would let us know," the spokesperson said.
Nvidia has had to walk a tightrope in Washington as its AI chips have become a powerful tool for all AI developers and a bargaining chip in economic competition with China.
Politicians and analysts say that Nvidia's AI chips could be used to create Chinese military AI models, or commercial AI models that could compete and eventually surpass American technology.
As AI has become more important to the government, Nvidia's Huang has befriended Trump and has given pro-American speeches about building U.S. AI infrastructure.
Huang has appeared with Trump at state dinners, AI summits, and international trips, all while pushing for certain Nvidia chips to get a green light to be shipped to China.
Earlier this year the U.S. government cleared Nvidia's H200 chip to be shipped to China, but Chinese regulators prevented their imports. H200s are Nvidia's Hopper generation chip, not the current faster Blackwell generation currently used by American AI developers.
The Nvidia spokesperson said the Chinese government is not looking for Nvidia products from regional clouds like Megaspeed.
"Instead, the PRC government blocked U.S. AI chips, protecting its own industry and resulting in the largest write-offs in U.S. tech history," the Nvidia spokesperson said. Last year, Nvidia wrote off about $4.5 billion in Chinese-tuned AI chips.
Don't look now, but Apple (AAPL +1.71%) is closing in on Nvidia (NVDA -0.80%) for the market cap crown. The consumer tech giant is rolling this year, on the strength of accelerating revenue growth and new product rollouts. Apple stock is up 26% so far this year, more than double the market's return. Its market cap just cracked $5 trillion.
In the other corner, Nvidia shares are up only 15% this year. The AI bellwether continues to deliver blowout financial results, but investors have rotated into memory stocks and other infrastructure plays that will benefit from the boom. Nvidia's market cap is currently $5.2 trillion. Don't be surprised if Apple pulls ahead of Nvidia in market cap, potentially in the final two months of this year.
Image source: Getty Images.
The case for Apple as the new market cap king Apple's revenue is accelerating for the third consecutive year. When it reports its fiscal fourth-quarter results next week, analysts expect top-line growth of 15% for fiscal 2026. It will be Apple's first fiscal year of double-digit revenue growth since 2021.
Apple stock capping off its biggest annual growth in five years is huge. Apple's trailing adjusted net margin topping 20% for the first time since 2012 could be even more important. Apple's long-running push to grow into a high-margin services company is starting to bear fruit.
It also has momentum on the hardware front to make it happen. The Tim Cook era brought unprecedented operational excellence when he arrived as the CEO in the summer of 2011. It failed to deliver on revenue growth and, to a much lesser extent, innovation. This will be just the fifth year of double-digit top-line growth in his 15-year reign.
He certainly planted the seeds for all of the new products rolling out these days. The new foldable Duo iPhone is raising the bar for smartphone selling prices. Apple's first MacBook Pro with a touchscreen was introduced this week. Cook has set up new CEO John Ternus with the tools to deliver stronger revenue growth on booming margins. It's not surprising to see that Apple is the best performer -- by far -- of the "Magnificent Seven" stocks.
AAPL Apple$349.72+$5.89 (+1.71%)
NASDAQ · As of 1:35 PM ET 10/29/26
Then there's Nvidia Nvidia investors shouldn't be upset when Apple flashes its high beams to pass the AI chip leader in the next couple of months. Nvidia has still had a respectable year, currently ahead of the five other Magnificent Seven names.
Nvidia stock is growing considerably faster than Apple. It's trading for less than 13 times next year's earnings, a more compelling valuation than Apple. Sustainability is the biggest question. Nvidia's revenue growth and net margin are stunning today, but both can tumble at the first hiccup in the AI revolution.
I am a proud shareholder of Apple and Nvidia. I think both can continue to beat the market over the long haul. However, with Apple's newfound momentum, it feels like the better buy as it gets ready to don the market cap crown again.
A top executive of a Singapore AI cloud firm that was accused of illegally selling Nvidia chips to China could also have been a Chinese spy, anonymous sources told the New York Times.
The executive, Alice Huang (or Huang Le), worked for Megaspeed and was photographed as one of multiple people hanging out with Nvidia CEO Jensen Huang during various business dinners in the Singapore region. U.S. intelligence agencies had been surveilling Alice Huang to learn more about her ties with China for about a year, the Times reports.
The concern, sources said, was that Alice Huang had grown so close to Jensen Huang that she could have been gathering information about Nvidia’s plans and the CEO’s efforts to convince the Trump administration to allow it to ship more advanced technology to China.
But an Nvidia spokesperson denied this, telling TechCrunch that the CEO’s relationship with the Megaspeed executive was the same as with any other regional customer.
“Jensen’s interactions with Ms. Huang are not unusual or unexpected. Meetings with customers are part of a C.E.O.’s job; Jensen talks with thousands of customer executives every year,” the spokesperson said in an emailed statement. The company also said, “Our regional cloud customers receive ordinary business information — not sensitive NVIDIA trade secrets — and zero information relevant to national security.”
In 2025, the Times reported that the Commerce Department had investigated Megaspeed over concerns that it was helping Chinese companies sidestep AI chip export regulations by reselling restricted chips to them. Alice Huang was said to be a top executive for the firm at the time.
An alleged Chinese spy developed a “close relationship” with Nvidia CEO Jensen Huang, setting off alarms among US intelligence officials who were secretly monitoring her communications, according to a report.
The woman, Alice Huang, also known as Huang Le, is a Chinese citizen who has served as a top executive at Singapore-based Megaspeed, an Nvidia customer and cloud partner that provides AI computing power to Chinese companies including Alibaba, the New York Times reported Thursday.
US intelligence agencies concluded that Alice Huang — seen in photos enjoying whiskey and dining with the tech titan — was secretly funneling information to Beijing, according to the paper, which cited people briefed on classified intelligence findings.
Nvidia CEO Jensen Huang was photographed drinking whiskey with Alice Huang, a Chinese businesswoman accused of passing intelligence to Beijing, at a Taipei bar in June 2024. @netthunder/LinkedIn US electronic surveillance identified Jensen Huang as one of Alice Huang’s contacts, but the report offered no evidence that he knew of her alleged intelligence activities.
The Times could not determine what information she passed along or how valuable it was to Chinese authorities. The report did not address whether the relationship was romantic in nature.
Photos posted online in June 2024 showed the duo at a Taipei, Taiwan, bar after a local tech show, where they reportedly quaffed whiskey with other AI bigshots.
They were also seen together in May 2025, exiting a Taipei restaurant following a business dinner with AI suppliers. In a video of the scene, Alice Huang is seen standing a few feet behind the Nvidia boss with a big grin on her face while he banters with local journos.
US authorities have been investigating Megaspeed over suspicions that it helped Chinese firms circumvent US export restrictions and smuggle advanced Nvidia chips into China, the Times reported.
Megaspeed operates as a middleman, purchasing Nvidia chips through the US arm of Inspur, a Chinese server manufacturer, and renting computing power from its Southeast Asian data centers to Chinese companies, according to the Gray Lady.
Inspur’s parent company has been blacklisted by Washington for funneling technology to China’s military, although its American subsidiary remains free of sanctions, according to the Times.
Nvidia is the world’s most valuable publicly traded company, boasting a market capitalization of roughly $5.2 trillion.
Alice Huang, also known as Huang Le. LinkedIn Its advanced chips have become the backbone of the artificial intelligence boom, giving Huang enormous clout in Silicon Valley and Washington as the US races to maintain its technological edge over China. The feds have banned Nvidia from selling its best chips to Chinese companies for years.
Jensen Huang is married to Lori Mills Huang, whom he met while studying electrical engineering at Oregon State University.
The couple has two children, Spencer and Madison, both of whom work at Nvidia.
President Trump was briefed on the intelligence findings roughly a year ago but chose not to take action, according to the Times, which added that he was wary of disrupting Nvidia’s lucrative chip sales and further complicating trade relations with China.
Nvidia CEO Jensen Huang has cultivated close ties with President Trump, successfully lobbying his administration to ease restrictions on AI chip sales to China. Getty Images Jensen Huang has cultivated close ties with Trump, attending a high-dollar donors’ dinner at Mar-a-Lago, Fla., with his wife, personally lobbying the president to allow Nvidia to continue selling chips to Beijing, the Times reported.
Nvidia subsequently donated at least $20 million to Trump’s White House ballroom fund, according to a person familiar with the matter cited by the Times.
The chipmaker also pledged to invest $500 billion in US manufacturing — a top Trump priority — while Huang successfully pressed the administration to loosen restrictions on AI companies and chip exports to China.
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Although US officials initially believed Jensen Huang did not know of Alice Huang’s alleged espionage activities, some senior Trump administration officials now doubt that the Nvidia boss “could have remained unaware” of her intelligence-gathering role for Beijing, according to the Times.
It remains unclear whether US intelligence agencies have formally changed their assessment.
Nvidia pushed back against suggestions that Jensen Huang’s dealings with the alleged Chinese intelligence operative were suspicious, describing Megaspeed as a typical regional cloud customer.
“Jensen’s interactions with Ms. Huang are not unusual or unexpected,” an Nvidia spokesperson told The Post.
President and CEO of NVIDIA Jensen Huang, left, and his wife Lori Huang talk to former Apple CEO Tim Cook during a state dinner for Chinese President Xi Jinping in the White House on Sept. 24. Getty Images “Meetings with customers are part of a CEO’s job; Jensen talks with thousands of customer executives every year.”
The company insisted that its regional cloud customers receive “ordinary business information — not sensitive NVIDIA trade secrets” and “zero information relevant to national security.”
Nvidia also said it regularly receives government updates about potentially problematic individuals and companies, adding that it “always” takes appropriate action.
“We’re confident that if the US government believes that any person is a threat to American industry, it would let us know,” the spokesperson said.
The chipmaker also rejected allegations that its technology was being diverted through Megaspeed, saying the claims were “thoroughly investigated and debunked last year.”
Nvidia CEO Jensen Huang was never warned by US intelligence officials that a Chinese businesswoman with whom he had developed a close relationship was allegedly gathering information for Beijing, according to the Times. REUTERS It maintained that Beijing has blocked American AI chips rather than sought them through regional cloud providers.
“China opposes vilifying China by peddling the so-called ‘Chinese spy’ narrative,” Chinese embassy spokesperson Liu Chang told The Post.
“China is committed to self-reliance and strength in science and technology, and its scientific and technological development has always been grounded in independent innovation.
“We urge the US to stop its malicious efforts to block and suppress China and its groundless smears and slanders, and do more things that are conducive to sci-tech exchanges and cooperation between the two countries.”
The Post has sought comment from the White House and Megaspeed.
MasterCard (MA - Free Report) came out with quarterly earnings of $5.31 per share, beating the Zacks Consensus Estimate of $5.14 per share. This compares to earnings of $4.38 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +3.31%. A quarter ago, it was expected that this processor of debit and credit card payments would post earnings of $4.77 per share when it actually produced earnings of $5.04, delivering a surprise of +5.66%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
MasterCard, which belongs to the Zacks Financial Transaction Services industry, posted revenues of $9.81 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 1.83%. This compares to year-ago revenues of $8.6 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
MasterCard shares have added about 6.9% since the beginning of the year versus the S&P 500's gain of 13.1%.
What's Next for MasterCard?While MasterCard has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for MasterCard was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $5.14 on $9.93 billion in revenues for the coming quarter and $19.91 on $37.25 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial Transaction Services is currently in the bottom 36% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
One other stock from the same industry, Western Union (WU - Free Report) , is yet to report results for the quarter ended September 2026. The results are expected to be released on November 4.
This money transfer company is expected to post quarterly earnings of $0.35 per share in its upcoming report, which represents a year-over-year change of -25.5%. The consensus EPS estimate for the quarter has been revised 2.5% lower over the last 30 days to the current level.
Western Union's revenues are expected to be $1.02 billion, down 0.8% from the year-ago quarter.
