Alphabet and Microsoft earnings tonight: capex guidance decides the AI chip bid

Tonight's after-close reports from Alphabet and Microsoft are the session's single biggest bottom-line catalyst, and the number that can move the tape may not be in the quarter behind them. It is the one ahead: how much capital each hyperscaler commits to AI infrastructure. Azure and Google Cloud capex guidance is the input that decides whether Tuesday's chip bid extends or reverses.

Tuesday put the AI trade back in charge. The S&P 500 rose 0.60% to 7,722.60, within roughly 1.2% of its record, and chips generated the move. Broadcom closed up 4% at 342.33 after a coalition of banks and Blackstone committed $63 billion in financing for Anthropic to buy its XPU accelerators, AMD jumped 5.45% to 560.26, and Nvidia rose 0.90% to 217.94 while the Nasdaq composite added 1.2%.

Related reading: Megacap earnings week: hyperscaler capex guidance is the AI-financing test.

The catch is how much of the tape the rally carries. Advancing volume reached 58.2% and new highs led new lows 12 to 7, and yet S&P 500 members still closed slightly negative at 245 advancers versus 257 decliners. Breadth improved from Monday but remains hostage to megacap AI names. That narrowness is exactly what tonight's prints test.

Both companies report after the close, and the input the market is wired for is forward-looking: how much Alphabet commits to Google Cloud and how much Microsoft commits to Azure. That figure is the hinge for the whole AI-capex trade. It runs straight through the semiconductor names that led Tuesday and decides whether the chip bid extends into a third day or reverses on the spot.

For the broader framework, see our Fed policy coverage.

Related reading: FOMC Decision Week: PCE Inflation and Big Tech Earnings.

The dependency shows up cleanly in the index that lives on it. QQQ, the Nasdaq-100 fund, gained 1.27% Tuesday to 721.25 but still sits about 8.5% below its 52-week high. In the research view it is fully dependent on tonight's capex guidance. Semis remain well below their own highs, so a soft number would not just dent the two companies reporting, it would deflate the long-duration growth complex that has carried the recovery.

Consider the two ways the session resolves. On the strong side, guidance that holds or raises capex keeps the financing-to-spend story intact, and a neutral Fed alongside it would let the rebound re-broaden from megacaps into industrials, materials and small caps, the broadening the Russell 2000 hinted at when it matched the index Tuesday. On the weak side, a disappointment would snap the two-day bid and expose how narrow the advance remains, with S&P members already in negative territory despite the green close.

Related reading: S&P 500 Breadth Improves as an AI-Led Rebound Nears a Record Ahead of the Fed Decision.

A second variable lands earlier in the session. The FOMC decision arrives at 18:00 UTC, roughly 90% priced as a hold at 3.75% to 4.00%. The real market-movers are the dissents and the December path: Dallas Fed President Logan wants another 50 basis points, and December-hike pricing has roughly doubled month over month, to about 73% to 82% by the Dec 8-9 meeting from 42% a month ago, with the 10-year near 4.99%. A hawkish hold and soft capex in the same session would re-anchor higher-for-longer and pressure exactly the long-duration AI multiples this campaign runs on.

So tonight is a two-variable session. The Fed sets the rate context in the afternoon, and the two hyperscalers set the capex vector after the close. Both landing soft is the recipe for a genuine re-broadening. Either one turning hawkish or weak presses the same crowded names.

Related reading: Earnings week ahead: Netflix and Tesla open the AI-narrative pressure test before the Oct 28 platform prints.

Thursday is already loaded with Amazon, Intel and Coinbase plus the advance estimate for Q3 GDP and September PCE, so the market gets no rest. When the close comes tonight, the number to watch is not the headline earnings beat; it is how much these two companies say they will spend next.

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