Alphabet Paid for AI With Debt and Stock | Microsoft Paid With Cash | Futures Fell

Nasdaq Futures Fell. Dow Futures Rose.

Nasdaq 100 futures were down about 0.9% early Thursday, and S&P 500 futures about 0.2%. Dow futures rose about 0.6%. Alphabet and Microsoft both spent less on AI than analysts expected. Futures split by exposure to that spending.

The 10-year Treasury yield closed Wednesday near 5.04%, up about 5 basis points after the Fed held. Futures put the odds of a December hike near 85%.

Third-quarter GDP and September PCE inflation arrive Thursday morning. Economists expect PCE inflation of 3.7% and core inflation of 3.1%. Bitcoin slipped below $80,000 overnight despite a third straight day of ETF inflows.

Investor Signal

Fed Chair Kevin Warsh said Wednesday that high-tech investment is leading growth. Hours later, the two companies behind much of that investment both spent less than forecast. A strong investment line in the GDP report would back the Fed's growth view and its December pricing. A weak one would test it.

Alphabet Raised $41 Billion to Fund Its Build. Microsoft Paid From Cash.

Alphabet (GOOGL) spent $51.4 billion on property and equipment in the third quarter. That was up 114% from a year earlier but below the roughly $55 billion analysts expected. Free cash flow was negative $9.1 billion, after negative $5.9 billion in the second quarter.

It covered the gap with about $41 billion of outside money: about $28.7 billion of notes and $12.4 billion of stock sold into the market. Long-term debt has nearly tripled since the end of 2025. Google Cloud revenue rose 103%. The shares were indicated about 10% lower early Thursday.

Microsoft (MSFT) spent $45.2 billion, about $5.5 billion below estimates. Its finance chief said some third-party capacity deliveries were delayed. Azure grew 48%, and free cash flow was $18.6 billion. The stock was indicated about 3% higher.

Investor Signal

Both companies grew fast, and the market split them by who paid. Alphabet held its 2026 spending plan of $195 billion to $205 billion and expects a significant increase in 2027, so its funding needs are rising. Microsoft trimmed its 2026 figure to about $170 billion on the same delays. CoreWeave (CRWV), which leases AI capacity, was indicated about 6% lower. Amazon (AMZN) reports after Thursday's close as the third big buyer to show its spending and its funding.

Oracle Capped Its Fundraising and Rose 11%. A Reported Deal Cut Marvell's Value by About $22 Billion.

Oracle (ORCL) promised to raise no more than $20 billion of new outside capital through fiscal 2030. It expects about $10 billion in stock and $10 billion in debt, on top of a $20 billion stock sale already completed. It also set positive free cash flow for the second half of fiscal 2028. Its 2030 revenue target matched analysts' views, but the funding limit was new. The shares closed up 10.6% Wednesday.

Marvell Technology (MRVL) is in advanced talks to buy Lumentum Holdings (LITE), Bloomberg reported. No deal has been announced. Lumentum was worth about $83 billion, about 38% of Marvell's value. Marvell was indicated about 10% lower early Thursday, and Lumentum about 6% higher.

Investor Signal

Investors rewarded a cap on new shares and marked down the prospect of many more. Marvell's cash covers less than 5% of Lumentum's value, so a deal would very likely use a large amount of stock. Alphabet's share sales raise the same concern. Oracle's plan still relies on vendor financing and customer prepayments it has not sized. Its next results, due in mid-December, will show whether cash flow is on the path it set.

ServiceNow and Fortinet Raised Forecasts. Both Were Indicated Sharply Lower.

ServiceNow (NOW) grew revenue 20.5% to $4.11 billion and raised its full-year subscription outlook. It expects growth in contracted revenue due over the next 12 months to slow to 18.5% this quarter, from 20.5%. Adjusted earnings of $1.00 a share were 2 cents below forecasts. The stock was indicated about 18% lower.

Fortinet (FTNT) beat on revenue and earnings and raised its billings forecast for the third time this year. Its adjusted gross margin fell to 79.6% from 81.6%, below forecasts, and its guidance points to no recovery this quarter. The shares were indicated about a quarter lower, after a 5.9% drop in Wednesday's session.

Investor Signal

Both beat on revenue. Investors priced slower future contracts and thinner margins over the quarter just reported. In a week focused on the payoff from AI spending, software sellers face a higher bar to show that AI adds to growth.

Ceasefire Bets Rose on a Reported Letter to Tehran. Traders Still Price Risk After the Midterms.

U.S. crude fell about 1.3% to near $101.40 a barrel early Thursday. The drop followed reports that Vice President JD Vance wrote to Iran's top security official about restarting talks. President Trump said he approved outreach on medical supplies but denied directing peace talks.

The same evening, U.S. officials told regional allies to prepare for possible military action after the Nov. 3 elections, the Associated Press reported. On Polymarket, the contract on the U.S.-Iran ceasefire holding through Nov. 8 rose to 81.5 cents from 72.5 cents. The Nov. 15 contract rose only to 58.5 cents.

Investor Signal

Traders read the letter as lowering near-term risk, not removing it. The prices imply about an 18.5% chance the ceasefire breaks by Nov. 8 and about 41.5% by Nov. 15, though the later contract trades thinly. Analysts say pledged releases from strategic reserves are largely complete. A break would hit a market with a thinner cushion and feed the inflation the Fed is watching.

Utah Filed Criminal Charges Against Kalshi and Its Founders

Utah charged Kalshi and its co-founders, Chief Executive Tarek Mansour and Chief Operating Officer Luana Lopes Lara, with 14 counts on Wednesday. Twelve are felony counts of online gambling promotion, based on sports trades by an undercover state investigator. No one has been convicted, and Kalshi called the case "crazy overreach."

The charges came two days after the federal government and the CFTC sued Utah to block its enforcement. Washington argues event contracts are federally regulated swaps. Utah has won the early court rounds.

Investor Signal

Criminal counts against named founders go beyond the civil suits states have used so far. If other states follow, the legal risk moves from the platform to the people who run it. Robinhood (HOOD) and Coinbase (COIN) both offer event contracts. Coinbase reports after Thursday's close, and its call is the next place that exposure could be addressed.

Investors paid for AI growth that funds itself and marked down growth that needs new money. Alphabet's stock sales, Marvell's likely share deal and Oracle's cap all pointed the same way. Software sellers learned the bar is set by what comes next, not by what just happened.

The growth and inflation data this morning, and Amazon after the close, will show whether the spending behind the economy can keep coming without more borrowing.