If you were left wondering why markets stumbled after Alphabet's strong results last week, the answer sits in the capex line. Spending is still climbing, and investors are becoming far less patient about waiting for the return.
That sounds harsh because Alphabet's quarter was excellent. Cloud demand surged and Gemini kept adding users, yet the shares fell because the bill grew even faster.
The missing proof sits between those two points: can AI software and cloud services produce enough revenue to make the infrastructure buildout worthwhile?
Microsoft: Is enterprise AI becoming real revenue?
Microsoft may be the cleanest test because Azure and its enterprise software businesses sit directly where companies are supposed to be paying for AI.
Strong Azure growth would therefore matter more than another headline earnings beat. Investors want evidence that Microsoft's infrastructure spending is translating into larger commercial workloads.
Technically, MSFT remains below its falling 200-day EMA band. The first resistance area sits around $406, followed by the EMA near $421. Support remains around $392, with a break below opening the way towards $369.
The Fed decides how patient investors can be
Wednesday’s Fed decision is due at 2:00 pm ET, followed by Chair Kevin Warsh’s press conference at 2:30 pm.
June’s CPI report cooled some of the inflation concerns, but traders have not completely ruled out a rate hike. For now, a hold remains the majority view in the latest CME FedWatch snapshot.
A surprise hike would put further pressure on technology valuations, leaving Microsoft, Meta and Amazon with an even higher hurdle to clear in their earnings calls.
That brings us to this week’s earnings.
Microsoft, Meta and Amazon are all producing enormous amounts of revenue, but they are also committing extraordinary sums t...
