{"id":106053,"date":"2025-10-30T13:32:11","date_gmt":"2025-10-30T13:32:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/106053\/"},"modified":"2025-10-30T13:32:11","modified_gmt":"2025-10-30T13:32:11","slug":"powell-gave-traders-a-green-light-to-double-down-on-ai-but-the-markets-punished-meta-and-microsoft-anyway","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/106053\/","title":{"rendered":"Powell gave traders a green light to double down on AI\u2014but the markets punished Meta and Microsoft anyway\u00a0"},"content":{"rendered":"

The broad index of large-cap companies in the S&P 500 closed flat, but the tech-heavy Nasdaq<\/a> 100 rose 0.55%. Tech stocks were led by Nvidia<\/a>, which was up 3%, and now has a market cap of more than $5 trillion. (Its stock is down 0.7% premarket this morning, suggesting that some traders are taking their overnight gains.) To put that in perspective, Nvidia\u2019s market cap is bigger than the GDP of every G7 country except the U.S. and Japan.<\/p>\n

Powell\u2019s remarks about AI were extensive<\/a>\u2014he was asked about it repeatedly in a Q&A session with reporters. At every turn, he insisted that the Fed was unbothered by the run-up in valuations of AI companies and the massive amount of capex spending they have triggered.<\/p>\n

\u201cI don\u2019t think that the spending that happens to build data centers all over the country is especially interest-sensitive. It\u2019s based on longer run\u2014it\u2019s, you know, longer-run assessments that this is an area where there\u2019s going to be a lot of investment and that it\u2019s going to drive higher productivity and that sorts of things,\u201d he said.<\/p>\n

\u201cThese companies\u2014the companies that are so highly valued actually have earnings and stuff like that. So if you go back to the \u201990s and the dotcom, they were\u2014these were ideas rather than companies, and you know, were\u2014so there\u2019s a clear bubble there. Whereas the\u2014you know, I won\u2019t go into particular names, but they actually have earnings and, you know, it looks like they have business models and profits and that kind of thing. So it\u2019s really a different thing,\u201d he added.<\/p>\n

Powell all-but gave the tech sector the green light to keep investing in AI, in other words, because he said he doesn\u2019t need to raise interest rates to choke off any irrational exuberance<\/a>.<\/p>\n

Investors\u2014after digesting earnings reports from Meta, Microsoft, and Alphabet\u2014reacted soberly. Meta shares are down 8.6% premarket after closing flat yesterday, in part because investors were unimpressed with the company\u2019s spending on AI.<\/p>\n

It was a similar story at Microsoft, which is down 2.64% premarket after closing flat yesterday.<\/p>\n

But Alphabet (Google) shares are up 7% premarket, even though that company is also continuing to spend big on AI.\u00a0<\/p>\n

\u201cMicrosoft, Meta and Alphabet send contrasting signals on the payoffs from the AI investment boom. The three tech giants saw their joint capex bill rise +89% y\/y to $78bn in the latest quarter. But with Meta delivering in line revenue guidance for the current quarter ($56-59bn vs $57.4bn est.) and Microsoft saying that capacity was still constraining growth in its cloud unit (+39% y\/y vs +37% est.), this left questions hanging over increasingly lofty expectations,\u201d Jim Reid et al at Deutsche Bank<\/a> told clients this morning.<\/p>\n

\u201cThere has simply never been a company like it in the history of financial markets. With Microsoft (-0.10%) also surpassing $4tn earlier this week, and Apple<\/a> (+0.26%) doing so yesterday, these companies are now more akin to countries than corporations,\u201d Reid said.<\/p>\n

Here\u2019s a snapshot of the markets ahead of the opening bell in New York this morning:<\/p>\n

S&P 500 futures were down 0.2% this morning. The last session closed flat at 6,890.\u00a0<\/p>\n

STOXX Europe 600 was down 0.44% in early trading.\u00a0<\/p>\n

The U.K.\u2019s FTSE 100 was down 0.4% in early trading.\u00a0<\/p>\n

Japan\u2019s Nikkei 225 was flat.\u00a0<\/p>\n

China\u2019s CSI 300 was down 0.8%.\u00a0<\/p>\n

The South Korea KOSPI was up 0.14%.\u00a0<\/p>\n

India\u2019s NIFTY 50 was down 0.68%.\u00a0<\/p>\n

Bitcoin was down to $110K.<\/p>\n","protected":false},"excerpt":{"rendered":"The broad index of large-cap companies in the S&P 500 closed flat, but the tech-heavy Nasdaq 100 rose…\n","protected":false},"author":2,"featured_media":106054,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[345,343,344,3065,13753,85,46,4487,190,125],"class_list":{"0":"post-106053","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-fed","12":"tag-fed-interest-rate","13":"tag-il","14":"tag-israel","15":"tag-jerome-powell","16":"tag-markets","17":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/106053","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=106053"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/106053\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/106054"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=106053"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=106053"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=106053"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}