Big Tech's $700B AI Tab Comes Due 💸

Welcome back to the Day Trading newsletter 📈

Three of the four hyperscalers reported Wednesday after the close and the market judged each one separately on the same question: are you spending all that AI money for nothing?

Alphabet and Amazon got the benefit of the doubt, Meta got punished, and Apple steps up tonight.

Let’s get into it 👇️ 

🤝 Powell's final FOMC meeting ended Wednesday with rates held at 3.50–3.75% and a remarkable 8-4 split — the most dissent on the committee since October 1992. Stephen Miran wanted a quarter-point cut; Hammack, Kashkari and Logan opposed including an easing bias in the statement. Powell confirmed it was his last press conference as chair but said he plans to remain on the Board of Governors. (CNBC)

📊 The first read on Q1 GDP came in at 2.0% annualized Thursday, undershooting the 2.3% consensus and capping a soft start to the year. Growth came from investment, exports and consumer spending, but the headline rebound from Q4's 0.5% is more modest than economists expected — adding ammunition to the doves on the FOMC just as the dissent count hits a 33-year high. (BEA)

🔼 March core PCE (the Fed's preferred inflation gauge) accelerated 0.3% on the month and pushed the year-over-year rate to 3.2%, its highest since November 2023. Headline PCE rose 0.7% on the month for an annual 3.5%, with the Bureau of Economic Analysis pinning the bulk of the increase on the Iran-war oil spike. The print lands exactly between a Fed already split on cuts and a market pricing more energy pain. (CNBC)

🛢️ Brent crude briefly touched $126 a barrel Thursday, a four-year high, before fading 3% to $114 by mid-morning as President Trump told aides to prepare for a lengthy U.S. naval blockade of the Strait of Hormuz. Trump rejected an Iranian proposal to reopen the strait in exchange for delayed nuclear talks, telling Axios the blockade is "more effective than the bombing." Oil has climbed for eight straight sessions. (CNBC)

💉 Eli Lilly jumped more than 7% in premarket after Q1 revenue grew 56% to $19.8 billion, Mounjaro sales rose 125% to $8.66 billion, and the company hiked full-year guidance to $82–$85 billion in revenue and $35.50–$37.00 in adjusted EPS. With the Foundayo (orforglipron) approval already in hand from earlier this month, Lilly is now selling the first oral GLP-1 for obesity — and tightening the screws on Novo Nordisk. (CNBC)

💰️ Caterpillar reported Q1 sales of $17.4 billion, up 22% year over year and well ahead of the $16.4 billion consensus, and trimmed its 2026 tariff hit to $2.2–$2.4 billion from $2.6 billion. The construction segment grew 38% and backlog hit a record $63 billion, up $28 billion or 79% from a year earlier. Operating margin slipped to 17.7% from 18.1% on higher tariff costs, and CAT raised its full-year revenue forecast. (CNBC)

☕️ Starbucks rose about 5% in extended trading Tuesday after Q2 revenue grew 8% to $9.5 billion and same-store sales jumped 6.2% globally — including a 7.1% North America comp that crushed the Domino's-flavored consumer-weakness narrative. The company raised its FY26 same-store guide to "at least 5%" and its adjusted EPS range to $2.25–$2.45. China was the lone soft spot at +0.5%. (CNBC)

💵 Bitcoin slid to roughly $74,900 immediately after the Fed decision Wednesday before stabilizing near $75,400, with $535 million in 24-hour liquidations and $138 million of net outflows from U.S. spot Bitcoin ETFs. The 8-4 split — with three FOMC members pushing back against the statement's easing bias — chilled the "Warsh pivot party" that had kept BTC bid into the meeting. The token has been blocked at $80,000 since mid-April. (The Block)

Alphabet, Microsoft, Meta and Amazon all topped Q1 estimates Wednesday, but the AH tape pulled them in opposite directions on a single variable: 2026 capital spending versus the cloud revenue to justify it.

Alphabet rallied after Q1 revenue of $109.9 billion (+22%) and a Google Cloud line that grew 63% to $20 billion, with cloud backlog nearly doubling to $462 billion; the company raised its 2026 capex range to $180–$190 billion (from $175–$185 billion) and CFO Anat Ashkenazi told analysts 2027 will rise "significantly" from there.

Amazon delivered the cleanest beat of the night. Total revenue of $181.5 billion, AWS up 28% to $37.59 billion, the segment's fastest growth in 15 quarters — and stock traded up more than 4% in extended hours, with management reiterating roughly $200 billion of full-year capex.

Microsoft posted Azure +40% in constant currency on $82.9 billion of revenue and $190 billion of 2026 capex guidance; the stock chopped around in extended hours, with Azure's strength roughly offsetting the capex sticker shock.

Then there was Meta. Meta beat on revenue at $56.3 billion but raised 2026 capex to $125–$145 billion from $115–$135 billion and missed on user growth, sending the stock down roughly 7% after-hours and as much as 8% in premarket.

Why it matters: The combined 2026 capex bill from these four names is now north of $700 billion, and the single biggest swing factor for the whole index this year. 

The market has stopped accepting "we're spending because demand is infinite" as a thesis. It now wants to see the demand on the income statement.

Alphabet and Amazon delivered exactly that proof point: $462 billion of cloud backlog and 28% AWS growth tell investors the dollars are landing as revenue.

Meta couldn't tell that story: its capex line spiked but its monetization story is still "Reels plus future agents," and Mark Zuckerberg's commitment to deliver "superintelligence to billions" is precisely the kind of open-ended promise traders punish in a tape that's already nervous.

Microsoft sat in between because Azure 40% growth gives air cover that Meta lacks.

What to watch: Apple closes the Mag 7 cycle Thursday after the bell, and the focus is less on capex (Apple barely plays this game) and more on iPhone 17 demand and Services.

From here, the AI capex story has two anchors: any hint hyperscalers can monetize the buildout fast enough to keep earnings rising, and any sign component costs (memory chips drove most of Meta's hike) keep climbing.

If the answer to either is no, the bull case for the entire 2026 tape weakens.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.