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The outlook for AI neocloud providers has sparked a clash between Tesla CEO Elon Musk, who warned that more than 200 such companies could face large-scale failures or consolidation, and Nvidia CEO Jensen Huang, who said during an interview at the GTC Berlin conference that demand for neocloud services has exceeded expectations and current funding shortages will eventually be resolved.

Although Musk and Huang appear to disagree over whether neocloud providers will collapse in large numbers and whether AI demand remains strong enough, their differing views ultimately reflect contrasting assessments of the industry's ability to absorb risk.

Contrasting views on AI infrastructure

Huang sees a computing shortfall driven by AI training and inference, as well as the value neocloud providers bring by supplementing supply and offering flexible computing capacity. Musk, by contrast, is more focused on the elimination mechanisms facing capital-intensive industries.

From Musk's perspective, growing AI demand does not automatically mean that every participant will be profitable. GPU procurement, data center construction, power connections, and customer contracts all require substantial upfront investment, making funding stability and utilization rates decisive factors in determining which companies survive.

"Neocloud" generally refers to a new type of cloud service provider whose main businesses include GPU computing rentals and AI-focused cloud services. These companies typically generate revenue by leasing or building data centers, purchasing accelerators in bulk, and securing long-term customers.

Their advantages include rapid deployment, flexible contracts, and a stronger focus on AI workloads. Their weaknesses are also clear: heavy capex, sensitivity to financing costs, high customer concentration, and significant dependence on GPU supplies and power resources.

Once financing conditions tighten or computing utilization falls short of expectations, maturity mismatches and cash-flow pressure can quickly emerge. From this perspective, Musk's warning should not be interpreted simply as a rejection of AI demand, but rather as a warning about highly leveraged expansion models.

Huang's optimism, meanwhile, does not stem from ignoring funding problems. Instead, he emphasizes that market demand can still provide enough room for high-quality computing capacity to be absorbed.

Demand growth and structural mismatch

The two seemingly opposing views on neocloud providers actually point to the same stage of industry development: AI computing infrastructure is moving from an "expansion race" into a period that will test financing discipline, operational efficiency, and industry differentiation.

Huang's assertion that AI demand has exceeded expectations does not contradict Musk's warning that many neocloud providers could fail. The AI computing market increasingly appears to face both an overall shortage and a structural mismatch.

High-end GPU clusters and data centers with sufficient power and rapid delivery capabilities remain scarce. In some regions and projects, however, utilization rates could remain low because of delayed power connections, inadequate network conditions, or slower-than-expected customer adoption.

China's AI industry is showing a similar pattern. Local telecommunications operators and data center providers have continued in recent years to develop intelligent computing centers and computing-resource scheduling platforms in an effort to raise utilization rates.

Despite a continuing shortage of high-end AI computing capacity in China, some regions and projects have also recorded low utilization at intelligent computing centers because of supply-and-demand mismatches.

From capacity to integrated services

Computing capacity has never been simply a matter of servers and racks. Companies that can better integrate computing power, networks, and electricity will be more likely to convert "stronger-than-expected demand" into sustainable revenue. By contrast, if a project focuses only on purchasing GPUs while neglecting network and energy infrastructure, a larger amount of computing capacity on paper could translate into heavier operating pressure.

Returning to the clash between Musk and Huang, their assessments are not mutually exclusive. A more accurate interpretation is that AI computing demand continues to expand, while financing markets are becoming more selective in supporting providers. Industry differentiation will center on funding costs, customer structure, and operational efficiency.

Hyperscale cloud providers are expected to retain their dominant position. The neocloud industry will not necessarily disappear as a whole, but it could undergo a significant shakeout. For the AI industry, the key issue is not simply whether "more than 200 neocloud providers" will fail. The more important question is whether computing infrastructure can shift from capex-driven expansion to efficiency-driven operations, and from isolated projects to the integrated management of networks, energy, and services.

The second half of the AI computing infrastructure buildout will test more than the speed of expansion. It will also test companies' balance sheets and operational capabilities—and this is about more than whether the AI industry is in a bubble.

Europe’s independent hotels turn to global chains to attract wealthy visitors

Family-run businesses are signing up with brands to tap into lucrative business travel market in sign of continent’s growing ‘chainification’

Leading chains are taking a growing share of Europe’s hospitality market, as the continent’s independent and family-run hotels increasingly sign up with global brands to access business travellers and the boom in big-spending US visitors.

More than 41 per cent of the 6.5mn hotel rooms in Europe were part of a chain brand as of August, up from 36 per cent in 2020, according to industry data provider CoStar. The continent’s “chainification” still lags the Americas and Asia-Pacific regions, where about two-thirds of hotel rooms are branded.

Major hotel companies such as Marriott and Hilton do not typically own most of the properties that operate under their brands. Instead, they partner with investors, developers and operators who run hotels under their names and gain access to the chains’ loyalty schemes and booking platforms.

Recruiting existing hotels to their networks offers a relatively speedy and inexpensive way to expand without having to develop new properties.

Hoteliers in Europe, where many have long operated without a brand, are increasingly open to partnerships that can provide access to new technology and distribution capabilities that would be expensive to develop independently.

Elie Maalouf, chief executive of InterContinental Hotels Group, said his company had in recent years struck deals for new openings and conversions in the Italian cities of Rome, Florence and Milan.

“These are great destinations where I’d say five years ago, the conversations wouldn’t have been the same,” said Maalouf, whose company owns the Holiday Inn, Kimpton and Six Senses brands. “But today you have a lot of local players reaching out.”

Chain brands can help European hotels take advantage of the surge in US travellers, who are more likely than Europeans to be members of hotel loyalty programmes.

US citizens made 23.3mn trips to Europe in 2025, up more than 1mn from 12 months earlier, according to the US National Travel and Tourism Office. Tourism Economics, a research group, predicts that figure will rise a further 5 per cent this year.

Becoming a franchise partner for Hilton’s Tapestry Collection of hotels had allowed the Chania Flair Boutique Hotel in Crete to access a wider and more “international” customer base, said Labros Tsiledakis, chief development officer at Hotelleading, its operator.

Name recognition also aided recruitment, with more than 1,000 people having applied for jobs at another Hilton-branded hotel opening next year, he added.

The eagerness of European hoteliers to lure high-spending Americans has come even as some locals, particularly in Spain, have become antagonised by what they see as overtourism in the Mediterranean.

Big brands also provide a better way to tap into the lucrative business travel market, where guests are more likely to seek out familiar names.

“Those are your best customers,” said Richard Clarke, a managing director at research firm Bernstein who covers the leisure sector. “They’ll come back again and again and they’re more likely to eat in your restaurant and buy things from your minibar.”

The major chains have sought to entice independent hoteliers to sign up to their networks by introducing “soft brands” with less stringent requirements for room size and amenities.

Hilton’s Outset Collection, launched a year ago, and InterContinental’s Noted Collection allowed independent hotels to “plug their beds into the brand’s distribution” without undergoing expensive development work, said Matthew Pohlman, chair of hospitality and leisure at law firm Goodwin.

Simon Vincent, president for Emea at Hilton, said European hoteliers were particularly attracted to light-touch brands because it allowed them to retain their property’s heritage while also accessing “technology and distribution capabilities which would be costly and difficult to develop independently”.

Still, some fear the ascent of major brands could damage the local character and heritage that many travellers value in Europe.

Markus Gratzer, secretary-general of the Austrian Hotelier Association, agreedthat independent operators were “under pressure” but insisted they were “not disappearing” from the market.

He saw reasons to believe that Europe’s chainification may stall, as AI-powered search enabled the best independents to access customers without the help of chain brands or via sites such as Booking.com that charged hefty commissions.

“Search engines in the past haven’t rewarded good-quality hotels,” said Clarke. “There is some hope that AI will enable the best hotels to get in front of guests without going branded.”

Germany fails to meet gas storage target as winter approaches

Prices could rise for other EU countries as bloc’s biggest economy will be forced to rely on more spot market purchases

Germany is entering the winter with gas stores well below target, leaving Europe’s biggest economy and potentially other EU countries vulnerable to further price surges and market shocks.

Germany’s 250 TWh of gas storage facilities are about 62 per cent full, well behind a statutory requirement for infrastructure operators to fill them to 80 per cent before the heating season. The EU as a whole is entering the winter with gas reserves well below historic norms, with stores across the bloc just below 75 per cent full.

Germany is the EU’s biggest gas user and has the largest storage facilities, meaning its need to continue to buy gas on spot markets could push up prices for other countries. Gas storage typically provides up to a third of EU gas demand during winter.

While policymakers insist the 27-country bloc does not face gas shortages this winter, benchmark European prices on Wednesday surged above €100 a megawatt-hour for the first time since December 2022, when the continent was in the throes of the energy price shock unleashed by Russia’s full-scale invasion of Ukraine.

“We do not expect a security of supply issue as such but for citizens that are struggling to pay their bills, that might not matter,” the EU’s energy commissioner Dan Jørgensen told a meeting of energy ministers in Luxembourg on Thursday.

A senior Italian official earlier this week accused Germany of burdening the rest of the bloc by failing to meet its 80 per cent storage target. Italy’s gas stores are 91 per cent full after the country paid €300mn to ensure sufficient reserves.

Unlike some other EU countries, Germany decided not to force storage operators to fill up over the summer, instead relying on market incentives. Storage owners normally fill facilities during the summer months when prices are typically lower, but continued disruption to supplies through the Strait of Hormuz and demand for gas to generate electricity during the heatwave in Europe meant that prices remained high throughout the summer months this year.

“We are getting hit twice: we paid €300mn to fill the storage facilities, and we are paying more for gas because the Germans are buying it now . . . this is something that really makes me angry,” Alessandro Noce, an Italian energy official, told a conference in Milan on Thursday, in remarks reported by Reuters.

Germany’s economy ministry acknowledged on Friday that the country would miss its storage target. “Of course, it would have been better if the storage facilities had been filled to a higher level,” a spokesperson said. “But there were reasons why that did not happen, including the conflict in the Strait of Hormuz and the subsequent price increases.”

The ministry added that, unlike 2022, when the country feared blackouts after Moscow cut pipeline gas supplies to Europe, Germany now had far more options thanks to liquefied natural gas terminals built following the crisis and “a closely interconnected European system”.

It also rejected the accusation from Italy that it had let down the rest of the EU by delaying the refilling of its gas storage.

Germany’s energy and economy minister Katherina Reiche in September ordered state-owned energy company Sefe to purchase and store more gas by mid-December.

But Sebastian Heinermann, managing director of INES, the German association of gas storage system operators, said that the country’s “failure to meet the storage targets demonstrates that gas storage for future winters must be secured through more binding measures”.

Heinermann welcomed indications that Germany’s Federal Ministry for Economic Affairs and Energy could introduce a “supplier obligation” to ensure the country has a strategic reserve of gas and urged the government to quickly pass laws to deliver this.

Despite its historically low level of gas stores, European gas demand has fallen by roughly 20 per cent since 2021, leaving it less exposed than in previous years to high prices.

Jørgensen has stressed that the EU will not reconsider plans to ban Russian LNG from the start of 2027 despite concerns over the high prices.

Xantium to separate from company controlled by billionaire Paul Tudor Jones II next year

A hedge fund within US investment firm Tudor is planning to launch as an independent firm with $9bn in investor assets, in what is thought to be the biggest so-called spinout in the sector’s history.

Quant-focused hedge fund Xantium, which employs around 300 people, is set to formally leave the company controlled by billionaire Paul Tudor Jones II in the first half of next year, according to people familiar with the matter.

It will set up independently with capital from its parent firm, the people added, but it is not clear if Tudor will hold an equity stake. Xantium and Tudor declined to comment.

Most of Xantium’s $9bn in capital today is external money, with the rest made up of investments from Tudor, Xantium’s leadership and some of its employees.

The largest hedge fund spinout to date is thought to be Leda Braga’s quant fund Systematica, which separated from Michael Platt’s hedge fund BlueCrest in 2015 with $8.4bn in assets.

More recently, macro-portfolio manager Diego Megia left Millennium Management with its blessing to launch his new firm Taula in 2024, with $5bn.

Data shared with the FT by specialist providers suggests that Xantium will be the biggest hedge fund spinout to date, if it goes according to plan.

Xantium was founded within Tudor in 2019 by Oliver Watson and Sergey Levin, formerly senior quants in the equities division of US hedge fund giant DE Shaw. The pair specialised in computer-driven trading strategies using data and mathematical models to predict equity market movements, joining Tudor in 2012.

The fund blends quantitative trading methods with human-led trading, similar to DE Shaw, although the majority of the risk is taken by computers, the people said. Xantium invests across asset classes including equities, commodities, bonds and foreign exchange and manages a single fund which encompasses all of its strategies.

Xantium has reached a size that it makes more sense to operate as an independent firm, according to the people. It has offices in London, New York, Salt Lake City and Abu Dhabi.

The launch comes at a difficult time for hedge fund debuts. The operational and legal costs to set up an independent fund have risen over recent years. Meanwhile, multi-manager hedge fund behemoths including Izzy Englander’s Millennium and Ken Griffin’s Citadel have dangled enormous sums to top portfolio managers to work for them rather than going it alone.

Hedge fund executives say that a new manager now needs to raise hundreds of millions of dollars from investors before a launch to help ensure its success.

Tudor has a long history of supporting new hedge funds. Arguably its biggest success was backing New York-headquartered quant Two Sigma, which is now one of the world’s largest hedge funds.

Abdul El-Sayed disinvites former primary rival Haley Stevens from campaign event amid war of words over Israel

Democratic unity appeared to be faltering in the key Midwestern Senate battleground of Michigan after a feud broke out between progressive candidate Abdul El-Sayed and his moderate former primary rival Haley Stevens.

The intraparty tensions in Michigan boiled over with just days to go before Tuesday’s midterm elections, spoiling Democratic attempts to maintain solidarity between its ideological factions as the party looks to deliver a sharp rebuke to US President Donald Trump.

Michigan is a crucial state for the control of the upper chamber of Congress. Democrats are defending a seat against Republican challenger Mike Rogers, with polls showing an exceedingly tight race.

El-Sayed emerged as the winner of a bitter primary race against Stevens in August, but the pair have struggled to project a common front against Rogers in the midterms election.

El-Sayed and Stevens were supposed to campaign together on Sunday, but the Democratic candidate asked Stevens not to attend after she criticised him for failing to condemn an ad by his supporters that suggested high grocery prices were driven by US military support for Israel.

“I’ve already been clear that that ad was not made by me and I do not agree with the contents of that ad,” El-Sayed told reporters on Saturday.

“Most people don’t care about this, like, intrigue stuff that you all love to carry. It is not of concern to the vast majority of Michiganders. People here are struggling to afford their gas. They’re struggling to afford their groceries. They’re struggling to see a doctor,” he added.

Stevens issued a statement on Friday saying she planned to attend the Sunday event organised by veteran Democratic congressman Jim Clyburn, but then lashed out at El-Sayed over the ad.

“A disclaimer is not a condemnation, and everyone in my community knows the difference,” she said.

“Abdul promises to get money out of politics. He can begin by getting Israel out of his explanation for everything Michigan cannot afford,” she added.

While Stevens has not withdrawn her endorsement of El-Sayed, her fiancé Jason Turkish is backing Rogers. “We have a nominee who just won’t say this is wrong,” he told Fox News, adding that El-Sayed’s stance puts “Jews at risk”.

Many Michigan Democrats have been shaken by the discord.

“First of all, I have no idea what the hell Stevens is doing,” said Mallory McMorrow, a Democrat who ran against both of them in the primary race, before endorsing El-Sayed. “This is a moment where we have to recognise the stakes,” she told CNN.

Democrats are already facing a huge challenge in their effort to win back control of the US Senate on Tuesday, which would require a net gain of four seats in the upper chamber of Congress.

The party is eyeing possible victories over Republicans in a series of staunchly conservative states ranging from North Carolina and Texas to Ohio, Alaska and Iowa — a defeat in Michigan would present an even greater hurdle as they would need to flip five seats in order to win the majority.

The company has quietly transformed its operations. Shares are a buy.

Out of all the ways to benefit from a potential gold rally, buying stock in the $12 billion miner Equinox Gold is among the best.

This might seem an arbitrary take, given the many publicly traded gold miners. But Vancouver-based Equinox, which is covered by just 13 Wall Street analysts, is more a diamond in the rough than a mere beneficiary of higher gold prices. With multiple published materials every quarter (its second-quarter summary runs 43 pages), it’s a fairly communicative company that’s on the doorstep of demonstrating productivity improvements in several of its six mines. It could therefore boost its valuation toward the rest of the industry, and of course would see its earnings explode higher if gold prices do the same.

This scenario would likely spark larger stock gains for Equinox than for other miners, thanks to its lower valuation. The industry would see profit expectations rise, while Equinox’s self-help story would give it the kicker of an expanding price/earnings multiple.

This thesis begins with the argument for higher gold prices. The precious metal is down 24% from its record high in January, to about $4,050 an ounce. That isn’t surprising, given that it has about doubled in the past three years, almost begging traders to take profits. But like clockwork, it always sees support above the roughly $3,900-to-$4,000 area, where buyers have swooped in all year to stabilize the price. Even with the recent dip, gold remains in its larger uptrend of the past three years, suggesting buying support is close by.

“We look at this as another generational opportunity to get into gold at a relatively low basis,” says Ben McMillan, chief investment officer at IDX Advisors. “The upside for gold is extremely robust.”

Sparking some of that upside would likely be central banks, which are diversifying their reserves away from U.S. dollars in the face of geopolitical tensions. The third-largest buyer in the second quarter, central banks and other institutions increased their net purchases of ounces by over 400% quarter over quarter, according to the World Gold Council. They tend to buy more on dips, which should give gold-related investors confidence in the commodity’s long-term trajectory.

“Central banks are not speculators,” McMillan says. “If ever there was a buy-the-dip participant, it’s those guys when it comes to gold.”

Higher gold prices mean earnings gains for miners—including Equinox, which saw almost all of its $770 million in second-quarter revenue from gold. When the price of gold rises, expected sales rise. Miners have many fixed costs, such as depreciation and other exploration costs that don’t change quickly. So, higher sales means higher profit margins, sending earnings up by a larger percentage than sales.

Just imagine what would happen to earnings estimates if gold reclaims its record high, 31% above current levels. Equinox would participate in the party, with the added tailwind of operational improvements.

It just acquired Orla Mining, which has two mines, one in Mexico and the other in Canada. The deal, a mostly stock transaction that closed in July, increases Equinox’s overall operating profit margin as the two Orla mines carry higher profit margins after accounting for all-in sustaining costs per mine versus Equinox’s mines. The company’s 2026 guidance implies it expects Orla’s mines to produce almost 400,000 ounces of gold annually, about one-third of the company’s expected 1.1 million ounces.

If the market sees that Equinox is integrating Orla without surprise costs or hiccups, it will price the higher margins into the stock. Often, the market remains skeptical of an acquirer until it sees successful integration, a risk to the story, but there’s currently no reason to doubt it.

“The integration will wrap up by the end of this year,” Jason Simpson, incoming Equinox CEO and former Orla CEO, tells Barron’s. “We’re well on our way to that.”

Two other Equinox mines, Greenstone and Valentine, both in Canada, have room for improved margins. Their profits per ounce of production lags behind those for “senior” gold producers—slightly larger miners Equinox aspires to rival, namely Kinross Gold, Alamos Gold, and Agnico Eagle Mines.

That’s where Equinox’s “trommel” comes in. That’s a machine that sorts out certain earth material during the mining process to pull out more gold-bearing rock faster. The company is installing the trommel this year. Current and outgoing CEO Darren Hall said on the second-quarter earnings call that the company will see some benefits of the equipment before year end.

Any update from the company in the third or fourth quarter that the trommel is unlocking more gold production at Greenstone would catalyze stock gains, as the market would anticipate higher margins there. More production in mining or excavating businesses typically translates into more market share for the producer. Revenue per mine would rise much faster than cost per mine, given that most of the mine’s fixed costs are already in place. Sure, a glitch with the trommel is a risk, but it might not crush the stock from here, given that the relatively small valuation already reflects subpar operations for Equinox.

“We expect valuation multiples will expand as the flagship Greenstone and Valentine mines ramp up production,” writes BMO analyst Kevin O’Halloran, who has a $15.70 price target on the U.S.-traded shares, which equates to a 50% gain from Wednesday’s close of $10.48.

For areas near Valentine, the company announced early this year it’s using “Dora AI,” an artificial-intelligence-powered software program that identifies promising exploration areas. Here, as well, Equinox is making a small investment to enhance gold production. Overall, Greenstone’s and Valentine’s productivity should improve over the coming quarters.

Greater productivity and margins would create a larger and more stable miner in Equinox—lifting the valuation. Currently trading at about 7.6 times forward earnings, the stock would rerate closer to the near 12 times for the VanEck Gold Miners exchange-traded fund. Just returning to par with the industry—where Equinox traded before the Orla merger—would increase the stock by 51%. That’s even before considering higher earnings from rising gold prices.

The main risk is that the price of gold could fall below recent support. Sure, a slow Orla integration or scant updates on the trommel are the main company-specific risks, but another leg higher in interest rates would push gold to the next level of support, at about $3,700, because a higher risk-free rate of return would compete against gold’s appeal. But that’s far from a certain outcome, given that rates have stabilized for weeks now, after having priced in a lot of inflation.

In Equinox, investors can strike gold.

The $13 Billion Startup Racing to Close America’s Hypersonic Gap

Author: Allie Garfinkle
Publication: Fortune
Date: October 31, 2026

📖 Read the full article on Fortune

Key highlights

The article profiles Castelion, a California-based defense technology startup valued at $13 billion, founded in 2022 by three former SpaceX executives.

The central investment thesis: Castelion is attempting to disrupt traditional defense contractors by applying SpaceX-style rapid development, testing and scalable manufacturing to missile production.

I can also prepare a detailed investment-oriented summary, covering Castelion's valuation, funding, competitive position against Lockheed Martin, and the broader hypersonic weapons market.

The Anthropic prospectus for its initial public offering is a unique document for many reasons. We don’t often get to see 1,300% sales growth coupled with an 85% gross profit margin, nor 93 pages of risk factors, with one of them warning that the company’s artificial-intelligence models may try to blackmail users. Fun times.

Another thing one doesn’t usually see from a start-up is nearly a trillion dollars in future commitments for supply and leases, especially considering the mere $16 billion in company sales in the first half of 2026. For the counterparties of all these deals, Anthropic represents a huge present and future customer, but also a ton of risk. Anthropic is writing a lot of checks, and if things don’t go as planned, some of them will bounce. Then, the dominoes would fall.

The prospectus lists deals for AI computing infrastructure with Microsoft, Alphabet, Amazon.com, SpaceX, Advanced Micro Devices, and Broadcom plus two smaller cloud companies, Nscale and Lambda.

Alphabet has the most complex relationship with Anthropic; it is mentioned 109 times in the prospectus. Alphabet is a distributor, a named competitor, and will be a greater-than-5% shareholder after the IPO thanks to multiple rounds of funding. It’s also a huge supplier. In addition to a Google Cloud contract for $115 billion, there’s a yet-to-be finalized cloud deal for Google’s tensor processing unit, or TPU, chips worth $125 billion to $150 billion. On top of that, Broadcom—which designs the chips with Google—is charging Anthropic $161 billion to rent TPUs.

Amazon was mentioned 166 times in the prospectus, and is also a distributor, competitor, greater-than-5% shareholder post-IPO, and a supplier to Anthropic. The companies have a $110 billion cloud contract.

SpaceX’s relationship is much simpler, with deals totalling $120 billion, though either party has the option to pull out starting during the first quarter of 2027.

By comparison, Anthropic’s contract with Microsoft Azure is small, at $45 billion. It has similarly sized agreements with Nscale and Lambda.

Anthropic also expects to buy or rent $20 billion worth of AMD’s Helios AI servers, and Nvidia equipment underpins many of these commitments.

Were Anthropic to breach any of these contracts, it would send the counterparties’ stocks tumbling.

These commitments by Anthropic (and similar ones from its main competitor, OpenAI) are a big part of why hundreds of billions of dollars are being spent on AI data centers by those counterparties, three of which—Microsoft, Alphabet, and Amazon—reported earnings this past week. Cloud spending and revenue were in sharp focus.

Microsoft reported its fiscal first quarter on Wednesday, and it was another quarter in which the company showed that its generational investments into AI are paying off. Sales at its Azure cloud unit were up 48% from last year, better than the Wall Street consensus estimate. Despite rapidly growing depreciation expenses, the operating margin in the segment that contains Azure held steady on the year, at 53%.

To underline how important Anthropic and OpenAI have become to these cloud giants, 30% of Azure sales and 11% of all revenue came via OpenAI. Microsoft also owns 24% of OpenAI.

What’s more, unlike the other two cloud companies that reported earnings this week (and Meta Platforms the previous week), Microsoft has still been able to pay for its capital expenditures with cash flows from operations. The company paid back $5 billion of debt in the quarter, and it’s still doing share repurchases, which Alphabet and Meta have both halted.

But even Microsoft is bending. On Thursday, it sold $25 billion in bonds, its first issuance since 2017.

Microsoft shares fell 0.2% that day.

Alphabet reported its third-quarter earnings at the same time. Google Cloud is on a heater, with rapidly expanding cloud and TPU hardware revenue. Segment sales doubled from last year, and the unit’s operating margin rose from 24% to 36%. These metrics were well ahead of Wall Street expectations, and things at Google Cloud could hardly be going better.

But the company’s core advertising business with search and YouTube faltered, missing estimates for sales and operating profit. Research and development expenses were way above projections. And the company’s speculative “other bets” segment showed a bigger loss than analysts had thought. All together, even as Google Cloud shone, the rest of the company limped out of the third quarter.

Moreover, Alphabet’s capital expenditures continue to grow sequentially, which wiped out all the September quarter record cash from operations, and the company posted its second quarter in a row of negative free cash flow. As a result, it made no share repurchases for the third quarter in a row. The stock was down 13% the following day.

Amazon’s third-quarter earnings came on Thursday afternoon, and it recalled what happened 24 hours earlier to Alphabet. The cloud unit, Amazon Web Services, had a great quarter, handily beating Wall Street’s high expectations for sales and operating margin.

But the retail segments faltered and missed combined expectations for revenue by a bit. Guidance for next quarter also disappointed.

But the biggest shock was $77 billion in capex in the quarter, and a free cash outflow of $35 billion, raising it to $62 billion so far this year. The company maintained its 2026 capex guidance of $220 billion, implying around a comparatively moderate $45 billion in the fourth quarter. This could mean positive free cash flow, at least for the holiday shopping quarter.

As long as tech giants remained so entwined with Anthropic and OpenAI, they have—to a large extent—cast their fates with these two start-ups. The tail is wagging the dog.

Brazilian President Luiz Inácio Lula da Silva won a surprise victory on Oct. 25, securing a fourth term.

Following the election, Brazil’s real plunged 7% and yields on 10-year government bonds rose two percentage points.

Some strategists believe the market reaction was an overshoot, while others warn that Brazil’s budget deficit is approaching 10% of GDP.

A fourth term for the left-leaning Brazilian President Luiz Inácio Lula da Silva is bad news from markets’ point of view. But is it bad enough to justify a 7% plunge in the real and two percentage point leap in yields on 10-year government bonds following Lula’s surprise Oct. 25 victory?

No, thinks Graham Stock, senior sovereign strategist at RBC BlueBay Asset Management. “There’s been an overshoot relative to deterioration in the fundamentals,” he says.

Most of Stock’s competitors agree in the short term. “We are looking for a bottom and patiently scaling in,” says Christopher Hays, an emerging markets debt portfolio manager at TCW.

Longer-term prospects depend on reading the 81-year-old Lula’s mind, among other known unknowns.

Volatile Brazilian equities are a niche play for the strong-of-stomach. The near-$1 trillion bond market attracts investors far and wide for the highest “real yields” (return minus inflation) of any decently liquid market. Those same yields are threatening a crisis for Brazil’s perennially overspending government and increasingly indebted population alike.

The sovereign 10-year yield is around 15% annually, with inflation less than 5%. Bank loans average more than 60%. Credit cards frequently charge triple digits. “No country can function with real rates of 10%,” says Arthur Budaghyan, chief emerging markets strategist at BCA Research.

Hawkish paranoia is embedded in Brazil’s central bankers after a decade of runaway inflation in the 1980s and ’90s. Monetary loosening will depend on Lula shrinking a budget deficit, approaching 10% of gross domestic product, says Steven Schoenfeld, CEO of MarketVector Indexes. “The only way to lower interest rates is to see some positive signs on fiscal policy,” he says.

Lula generated few such signs in the third term he is just completing. More than 90% of Brazilian state spending is set automatically through a web of indexation schemes, making cuts doubly challenging for any government.

The good news is that Brazil is flush with cash, points out Thierry Larose, portfolio manager for emerging markets local debt at Vontobel Asset Management. The central bank is sitting on more than $360 billion in currency reserves as commodity exports boom. Foreigners hold just 10% or so of local-currency bonds, minimizing the risk of a “hot money” run. “Brazil is not facing a liquidity crisis, still less a solvency crisis,” Larose says.

Fourth-term Lula hardly needs shock therapy to stem the vicious cycle of mounting debt pushing mountainous interest rates, TCW’s Hays says. A primary budget surplus (not counting interest payments) of 1% of GDP would “be taken positively by markets,” he predicts.

Budaghyan’s BCA sees a less investor-friendly escape from the rate straitjacket: the central bank printing money to buy government debt, known in the developed world as quantitative easing. For Brazil’s more fragile economy, this policy will result in “massive” currency devaluation, unleashing inflation and crushing bondholders. “Basically, Brazil needs to do QE,” he says. “But then where does the currency go?”

Which path to expect depends considerably on armchair psychoanalysis of Lula, who was first elected president 24 years ago. RBC’s Stock sees a “social democrat” who has tightened the fiscal reins before when circumstances demanded it. Schoenfeld frets about new populist promises Lula unveiled in the weeks before his runoff triumph, from retiring small business debt to shortening the official workweek. “The government absolutely can’t afford these measures,” he says.

The smart money is buying the dip for now, though.

LONDON/MOSCOW, Oct 31 (Reuters) - OPEC+ oil-producing countries have ‌agreed in principle to keep their December oil output targets steady at a meeting on Sunday, three people with knowledge of the matter ​told Reuters, in line with expectations that further output ​policy adjustments won't occur until next year.

Sunday's online meeting ⁠of seven core OPEC+ members — Saudi Arabia, Russia, Iraq, ​Kuwait, Algeria, Kazakhstan and Oman — comes as Gulf members have been ​boosting exports that have been disrupted for months by the Iran war. Most, however, are still pumping well below their output targets.

All three ​people declined to be identified.

OPEC+ comprises the Organization of the Petroleum ​Exporting Countries and allies including Russia.

In September, OPEC+ completed the phased rollback ‌of ⁠a 1.65 million-barrel-per-day supply cut first agreed in 2023. Disruption caused by the Iran war has meant Gulf producers are falling below their quotas.

Reuters reported in July that OPEC+ was ​likely to make ​no changes to ⁠its targets during the fourth quarter as it turns its focus to 2027 quota negotiations.

The ​group still has one more layer of production ​cuts ⁠of about 2 million bpd covering most members through the end of 2026.

OPEC+ needs to finalise a review of members' production ⁠capacity ​during the fourth quarter before setting ​the 2027 baselines that will determine future quotas and shape plans to unwind ​those cuts, sources have said.