Alphabet falls with profit below expectations and Fed maintains interest rates, but Microsoft and Oracle support the AI ​​theme

Alphabet's shares plunged in trading after the closing bell in New York, following a third-quarter earnings report that was below expectations in revenue and profit, and reignited the debate over the return on billions spent on artificial intelligence. According to Bloomberg Television, Nasdaq futures fell around 0.8% this Thursday morning in Asia, and United States futures fell 0.4%.

Alphabet's revenue totaled US$127.6 billion, just below the estimate of US$127.9 billion. The biggest shock came from earnings per share, at US$2.12, a 30% drop, attributed to an unrealized accounting loss with the company's participation in SpaceX. According to the reporter interviewed by the broadcaster, this is a loss of paper, with no cash outflow, but structural concerns remain.

Search revenue grew 12% to $63.3 billion, slowing from the previous quarter. Free cash flow was negative at US$29.1 billion for the second quarter in a row, according to the broadcast. In analyst Mandeep Singh's assessment, the cloud division was the counterpoint: it grew more than 100% in the quarter, and the company still lacks an AI agent product that crosses its applications.

Microsoft and Oracle gain momentum

Microsoft rose with results above consensus. Revenue was US$92.3 billion, against an estimate of US$90.6 billion, and earnings per share were US$4.93. Azure cloud growth exceeded market projections, and capital investment (capex) of US$39.4 billion was below the expected US$45.9 billion. Management, however, said that this does not represent a decline and projected around US$50 billion for the following quarter. According to Bloomberg, the company still faces difficulties in putting data centers online in time to meet demand.

Oracle, which did not release a balance sheet, rose more than 13%, its best day since May, after presenting a revenue target of US$225 billion and committing to positive free cash flow in the second half of fiscal year 2028, with a target of US$30 billion in fiscal year 2029. For the broadcaster, fiscal discipline has been rewarded this earnings season.

Fed maintains interest rates and long interest rates rise

The Federal Reserve maintained the interest rate, as expected, in a vote with two divergences. Central bank president Kevin Warsh also announced that the committee will have fewer interest rate-setting meetings starting next year, and that one of them, in 2027, will be dedicated solely to monetary strategy, without a vote on the rate or a statement.

According to Bloomberg's executive editor Paul Dobson, the decision was not seen as tough enough in relation to what the market was pricing in: short interest rates retreated and the curve steepened, while long interest rates rose due to doubts about the Fed's commitment to combating inflation. The market still expects a rise in December, but the trajectory in 2027 has become less clear. Dobson linked higher interest rates to the higher cost of financing the expansion of AI.

Financing for the sector is already at a record high: global issuances of debt securities total US$6.6 trillion this year, according to the broadcast. Economist Sebnem Kalemli-Ozcan, from Brown University, assessed that persistent inflation indicates new interest rate hikes and pointed to the AI boom as the big unknown for prices from 2027 onwards.

Samsung is the next test

Asian markets were awaiting Samsung's earnings report, which has the task of maintaining enthusiasm following SK Hynix's strong results. For Jung In Yun, from Fibonacci Asset Management Global, chipmakers' profits could remain strong until 2030, but higher capital costs could put pressure on valuations. Manager Vikas Pershad, from M&G Investments, said he was closer to memory neutrality and questioned the return on investments in data centers.

Automatically translated from Portuguese.