Core Viewpoint - Oracle's disappointing earnings report has raised concerns among investors about the sustainability of tech companies' aggressive capital expenditure (capex) strategies, particularly in the AI sector [1][5][9]. Financial Performance - Oracle reported earnings that exceeded expectations but revenue of $16.06 billion fell short of the $16.21 billion forecast by analysts, leading to a 14% drop in its stock [1][2]. - Cloud sales increased by 34% from the previous quarter but also did not meet estimates, contributing to investor concerns [1][2]. Capital Expenditure Concerns - The company announced plans to increase its capex by approximately $15 billion next year, raising alarms about the aggressive spending habits of major tech firms [2][9]. - Analysts have speculated that Oracle's ambitious spending plans may take time to yield results, leading to skepticism about the AI trade [5][9]. Market Impact - Oracle's stock decline negatively affected other AI-related stocks, contributing to a 0.31% drop in the S&P 500 index during premarket hours [7][8]. - Major AI stocks such as Nvidia, Palantir, Advanced Micro Devices, and Broadcom each saw a 3% decline following Oracle's earnings report [8]. Investor Sentiment - The market reaction indicates a growing skepticism among investors regarding the viability of AI investments, particularly if major players like Oracle are unable to meet revenue expectations [5][10]. - Concerns about Oracle's debt-fueled data center expansion and the uncertainty surrounding AI spending are likely to exacerbate caution among investors [9].

Some companies uh have been getting punished around earnings last week for coming out with these huge figures of capex spending plans over the coming quarters, the coming years. Are you confident that the demand is going to meet the spend. >> I can't speak for the whole industry. I can only speak for Microsoft.Yeah. >> And what I can say for Microsoft is that demand is clear. It is present.Our biggest challenge is not a risk of you getting ahead of demand. It's actually keeping pace with demand. And what we ...

Core Viewpoint - The upcoming week is critical for the market, with significant focus on mega-cap earnings and the Federal Reserve's decisions, which could impact market sentiment and performance. Group 1: Market Sentiment and Expectations - The market is currently experiencing a resilient rally, driven by positive trade headlines and expectations for favorable results from mega-cap companies [1] - Expectations for the MAG 7 companies indicate an average earnings rise of 14.5%, which is relatively low compared to the 35% average seen over the past couple of years [5] - Nearly 90% of companies that have reported earnings thus far have exceeded expectations, although this has not led to significant market rewards [6] Group 2: Importance of Mega-Cap Companies - Mega-cap companies, excluding Tesla but including Broadcom, represent about one-third of the S&P 500's market capitalization, with the total including other significant players reaching approximately 43-44% [3][4] - If there are any disappointments in earnings from these mega-cap companies, it could pose a substantial problem for the overall market [10] Group 3: Capital Expenditure and Growth Rates - Capital expenditure (capex) spending is projected to reach $105 billion across the mega-cap group, with potential upside for companies like Apple and Amazon [6] - Growth rates for mega-cap stocks have been declining, which aligns with earlier predictions that growth would slow for these companies while accelerating for others [8] Group 4: Broader Market Trends - Financials have shown strong earnings per share (EPS) growth of over 20%, surpassing the expected 13% [11] - The market has seen significant returns from non-profitable names and heavily shorted stocks, indicating a shift towards optimism regarding future earnings growth [11] Group 5: Trade Relations and Tariffs - The market is less concerned with specific trade details between the U.S. and China, focusing instead on avoiding worst-case scenarios related to tariffs [12][14] - There is a general acceptance of rising tariffs and their impact on prices, with the market currently at record highs suggesting a level of confidence in the trend not worsening [15]

Economic Data and Market Sentiment - The Philly Fed index showed a significant decline from 23.2% last month to negative 12.8%, indicating a miss in regional economic data [1][2] - Corporate earnings reports from banks and airlines have been solid, with United Airlines and Delta performing better than expected, suggesting strength in the US consumer [3][4] Upcoming Earnings and Economic Indicators - American Express earnings are anticipated to provide insights into affluent US consumers, with several major companies set to report earnings soon, including Tesla on October 22nd and five major tech companies on October 29th and 30th [4][5] - The Consumer Price Index (CPI) report is scheduled for October 24th, which will be crucial for market expectations [7] Federal Reserve and Interest Rates - Recent comments from Fed officials, including Jerome Powell, suggest a more dovish stance with discussions of potential rate cuts, possibly starting in October [8][9] - Stephen Myron indicated support for at least two rate cuts before the end of the year, contributing to a favorable outlook for stocks [10] Commodity Prices and Inflation - Crude oil prices have decreased from just below $63 to around $58.5, which is a significant factor in the inflation landscape [10][11] - The stability of the dollar, along with declining crude prices, is seen as favorable for the stock market [11]

Market Sentiment - The market is perceived as somewhat frothy, with significant capital inflow, particularly into the AI sector, raising questions about sustainability [1][2][4] - The Federal Reserve is navigating a challenging environment with inflation concerns while employment is softening, leading to discussions about the necessity of rate cuts [2][4] AI Sector Insights - A report from Bane indicates that AI companies may face a revenue shortfall of up to $800 billion by 2030, highlighting potential challenges ahead [4] - There is confidence in the AI trade's ability to continue driving market strength, with expectations of spending reaching approximately $3 trillion [6][9] - The early stages of AI spending are noted, with ample private capital available to support growth, although the trajectory may not be linear [7][8] Earnings and Market Performance - The market is closely monitoring earnings to ensure they meet elevated expectations, as this is seen as a key factor supporting current market levels [9][10] - The S&P equal weight and market cap weighted indices have been trading closely, indicating a potential shift in market dynamics [11] Broader Market Trends - There is a belief that conditions are now favorable for a broader market rally, with potential cyclicality introduced by anticipated rate cuts [12][13] - The Russell 2000 index is highlighted as a potential beneficiary of this cyclicality, reflecting market sentiment over the past few weeks [13]

is joining me now is Andreas Garcia Amaya, CEO at Zo Zoe Financial. Um, so break this down for us because it feels like we've already done a lot of capex spending as it pertains to AI. Uh, you think it could be higher than the 90s.What about higher than what we've already seen so far. >> Yeah, so there's a couple uh analogies you can make to the late 90s to the infrastructure boom that led, you know, that led to the internet boom. Um the the first one being that you need to kind of lay the rails for then th ...