4 events that could make the next 48 hours a wild ride for the AI trade
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Joe Ciolli
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The Fed will set the rate backdrop, while Alphabet, Microsoft, and Amazon face fresh questions about AI spending.
- The Fed gets first crack at markets, then Alphabet, Microsoft, and Amazon will provide AI-trade updates.
- Here's what investors are looking for in each event, and how markets could respond.
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Forget a double-header. The market is about to get a quadruple-header that could reset the trajectory of stocks and bonds.
By Thursday night, investors will have heard from the Fed and three of the biggest spenders in the AI trade: Alphabet, Microsoft, and Amazon.
The throughline will be a familiar one: Can Big Tech keep pouring money into AI infrastructure without breaking investors' faith in the payoff?
Here's a timeline of what investors will be looking for from each event, and how the market could respond:
Wednesday, 2 p.m. ET: Fed decision and Kevin Warsh presser
What investors are looking for: The Fed is widely expected to hold rates steady, so the focus will be on messaging from Chair Kevin Warsh. Will he sound worried about sticky inflation and higher energy prices? Or will he leave the door open to holding off on another hike by the end of the year? The latter would force markets to rethink their expectation of a December hike, which currently stands at about 75%.
Investors should also watch for dissents in favor of a hike, which could reveal just how much appetite remains for further tightening.
How markets could respond: A more hawkish-than-expected Warsh could push Treasury yields higher and make an already-fragile AI trade even wobblier. A patient tone could spark a relief rally, although it would hardly settle the bigger question of whether inflation is cooling.
After Wednesday's close: Alphabet and Microsoft report
Alphabet
What investors are looking for: Growth in the businesses where Alphabet's AI spending should show up most clearly, especially Cloud. They'll also want reassurance that Search growth is holding up as AI agents reshape how people find information online. Finally, investors will want a capex outlook that sounds ambitious without setting off fresh alarm bells about cash flow and financing.
How markets could respond: Strong Cloud growth could support Alphabet's existing role as a high-quality way to own the AI buildout. A spending surge without a matching revenue story could revive capex anxiety not just for Alphabet, but across the broader AI trade.
Microsoft
What investors are looking for: Azure growth and Copilot monetization — once again, the areas most closely tied to whether Microsoft's AI spending is paying off. They'll also want to hear that demand remains strong enough to justify the company's enormous data-center buildout.
How markets could respond: A big Azure beat would likely boost the entire AI trade. Anything that suggests cloud demand is slowing, or capex is outrunning returns, could hit the stocks of Microsoft and its chip-and-data-center peers.
After Thursday's close: Amazon reports
What investors are looking for: AWS growth (since the business is a major recipient of AI spending), guidance on operating margins, and whether CEO Andy Jassy raises the company's roughly $220 billion capex forecast again.
How markets could respond: A strong AWS print could cap the week with a renewed AI vote of confidence. A soft cloud number or another giant spending increase could lead to a flare-up of investor nerves across the AI trade.
By Friday morning, investors should have a much clearer answer to the market's favorite question: Is AI spending still a growth engine, or is it becoming too much of a financing headache?
The post 4 events that could make the next 48 hours a wild ride for the AI trade appeared first on Business Insider
