๐ก Daily Briefing Overview | October 29
RecodeX Roundup: Over the past day, three key threads have intertwined to shape global markets. Alphabet's earnings fell short of expectations, and the company acknowledged that AI is disrupting traditional search. Combined with pressure from its AI investment and cash flow, this reignited concerns about the returns on tech giants' massive AI spending. The Federal Reserve held rates steady and signaled a relatively hawkish stance, while stronger-than-expected U.S. third-quarter GDP further heightened concerns about tightening. Meanwhile, Samsung Electronics' third-quarter results and warning of a chip supply shortage, rapid advances in AI computing power and model ecosystems, and both progress toward compliance and security incidents in the crypto asset sector together shaped the day's news.
๐ Global Macro and Central Banks
1. The Federal Reserve decided to hold interest rates steady at this meeting, in line with market expectations. After the decision was announced, spot gold briefly rose by $7 to $4,043 per ounce.
2. Markets interpreted the Fed's decision to hold rates steady as a โhawkish skip.โ The dollar subsequently gave back its gains and turned lower, reflecting the view that the Fed remains hawkish even as it pauses rate cuts.
3. Fed Chair Warsh said there are no excuses or exceptions when it comes to achieving price stability, and that the committee believes obtaining more information will help determine the appropriate policy stance.
4. The initial estimate of U.S. real GDP growth for the third quarter was an annualized 3.4%, above market expectations of 3.2% and well above the previous reading of 2.20%. The U.S. September PCE price index was in line with market expectations. Following the data release, concerns about further Fed rate hikes intensified.
5. Initial jobless claims in the U.S. for the week ending October 24 came in at 194,000, below market expectations of 199,000.
6. The Hong Kong Monetary Authority announced that it would keep the base rate unchanged at 4.25%. Hong Kong's base rate is linked to Federal Reserve rate policy. A CICC research report said the Fed's base case is to raise rates once more in December and then remain on hold.
๐ค AI and Tech Giants
1. Alphabet reported third-quarter 2026 revenue of $127.58 billion, below market expectations. Its shares plunged more than 7% after the earnings release, with losses briefly widening to 10% in after-hours trading and reaching 12.18% intraday. Around $500 billion was wiped from its market value.
2. Alphabet acknowledged that its โAI modeโ has disrupted its traditional search business. Both sales and profits fell short of market expectations. Its quarterly filing listed approximately $98.5 billion in contingent commitments, an increase of about $23 billion from the previous quarter.
3. Google's AI-related spending reached $51 billion, significantly increasing cash flow pressure. Its โOther Betsโ segment, which includes Waymo, accounted for just 0.3% of total revenue this quarter. Waymo continues to expand overseas but is still burning cash.
4. YouTube's third-quarter advertising revenue rose 9% year over year to $11.2 billion, a slower pace than in recent quarters and below Alphabet's overall growth rate.
5. Microsoft shares rose 2.8% after hours on the back of solid cloud sales, with Azure growing 43%. CFO Amy Hood said the company had lowered its capital expenditure outlook due to delays in third-party computing capacity deliveries and plans to raise at least $25 billion through a U.S. dollar bond offering.
6. At its 2026 Investor Day, Oracle announced its long-term outlook, projecting total revenue above $225 billion and non-GAAP earnings per share above $21 by FY30, with a free cash flow target of more than $30 billion. The outlook eased investor concerns about the prospects for returns on its AI spending.
๐ผ M&A, Funding and Regulation
1. Two people familiar with the matter said the U.S. Department of Justice is reviewing Nvidia's acquisition of AI platform Hugging Face. The specific scope and progress of the review have not yet been disclosed.
2. Chipmaker Marvell is in advanced talks to acquire optical communications and laser manufacturer Lumentum. Following the news, Lumentum shares surged in after-hours trading, gaining more than 10%. Neither company has announced specific deal terms or a timeline.
3. TPG is in talks to acquire a U.K. data center company in a deal valued at around $5 billion. Discussions with seller Elliott Management are ongoing, and there is no guarantee a deal will be reached.
4. DoorDash is in advanced talks to acquire grocery delivery platform Instacart in a deal valued at around $17 billion. An agreement could be officially announced as early as Thursday morning.
5. Utah has filed criminal charges against prediction market platform Kalshi, accusing it of promoting illegal gambling. New York, Washington and other states have previously filed lawsuits against Kalshi over similar issues. Kalshi has also hired former Obama adviser Schultz.
6. Deutsche Telekom has reportedly halted plans for a large-scale merger with T-Mobile, and related efforts have been put on hold.
๐ Industry and Company News
1. Samsung Electronics reported final third-quarter results, with revenue of 195.3 trillion won, slightly above preliminary figures, and operating profit of 107.4 trillion won, in line with preliminary figures. Consolidated revenue was $141.1 billion and operating profit was $77.5 billion, up 126.88% and 783.11% year over year, respectively. The chip-focused DS division accounted for about 99% of the company's total operating profit.
2. Samsung Electronics expects the chip supply shortage to worsen further next year and plans to begin production of HBM4E high-bandwidth memory for AI accelerators in the first half of next year.
3. China's first Ascend 950DT 1,024-card AI computing cluster has gone live in Wuhan. Each node is equipped with 1,024 Ascend NPU accelerator cards, delivering 1 EFLOPS of FP8 computing power. Tianji 300, developed by domestic GPU maker Iluvatar CoreX, outperformed Nvidia's H200 in real-world testing.
โฆ
RecodeX Roundup: Over the past day, three key threads have intertwined to shape global markets. Alphabet's earnings fell short of expectations, and the company acknowledged that AI is disrupting traditional search. Combined with pressure from its AI investment and cash flow, this reignited concerns about the returns on tech giants' massive AI spending. The Federal Reserve held rates steady and signaled a relatively hawkish stance, while stronger-than-expected U.S. third-quarter GDP further heightened concerns about tightening. Meanwhile, Samsung Electronics' third-quarter results and warning of a chip supply shortage, rapid advances in AI computing power and model ecosystems, and both progress toward compliance and security incidents in the crypto asset sector together shaped the day's news.
๐ Global Macro and Central Banks
1. The Federal Reserve decided to hold interest rates steady at this meeting, in line with market expectations. After the decision was announced, spot gold briefly rose by $7 to $4,043 per ounce.
2. Markets interpreted the Fed's decision to hold rates steady as a โhawkish skip.โ The dollar subsequently gave back its gains and turned lower, reflecting the view that the Fed remains hawkish even as it pauses rate cuts.
3. Fed Chair Warsh said there are no excuses or exceptions when it comes to achieving price stability, and that the committee believes obtaining more information will help determine the appropriate policy stance.
4. The initial estimate of U.S. real GDP growth for the third quarter was an annualized 3.4%, above market expectations of 3.2% and well above the previous reading of 2.20%. The U.S. September PCE price index was in line with market expectations. Following the data release, concerns about further Fed rate hikes intensified.
5. Initial jobless claims in the U.S. for the week ending October 24 came in at 194,000, below market expectations of 199,000.
6. The Hong Kong Monetary Authority announced that it would keep the base rate unchanged at 4.25%. Hong Kong's base rate is linked to Federal Reserve rate policy. A CICC research report said the Fed's base case is to raise rates once more in December and then remain on hold.
๐ค AI and Tech Giants
1. Alphabet reported third-quarter 2026 revenue of $127.58 billion, below market expectations. Its shares plunged more than 7% after the earnings release, with losses briefly widening to 10% in after-hours trading and reaching 12.18% intraday. Around $500 billion was wiped from its market value.
2. Alphabet acknowledged that its โAI modeโ has disrupted its traditional search business. Both sales and profits fell short of market expectations. Its quarterly filing listed approximately $98.5 billion in contingent commitments, an increase of about $23 billion from the previous quarter.
3. Google's AI-related spending reached $51 billion, significantly increasing cash flow pressure. Its โOther Betsโ segment, which includes Waymo, accounted for just 0.3% of total revenue this quarter. Waymo continues to expand overseas but is still burning cash.
4. YouTube's third-quarter advertising revenue rose 9% year over year to $11.2 billion, a slower pace than in recent quarters and below Alphabet's overall growth rate.
5. Microsoft shares rose 2.8% after hours on the back of solid cloud sales, with Azure growing 43%. CFO Amy Hood said the company had lowered its capital expenditure outlook due to delays in third-party computing capacity deliveries and plans to raise at least $25 billion through a U.S. dollar bond offering.
6. At its 2026 Investor Day, Oracle announced its long-term outlook, projecting total revenue above $225 billion and non-GAAP earnings per share above $21 by FY30, with a free cash flow target of more than $30 billion. The outlook eased investor concerns about the prospects for returns on its AI spending.
๐ผ M&A, Funding and Regulation
1. Two people familiar with the matter said the U.S. Department of Justice is reviewing Nvidia's acquisition of AI platform Hugging Face. The specific scope and progress of the review have not yet been disclosed.
2. Chipmaker Marvell is in advanced talks to acquire optical communications and laser manufacturer Lumentum. Following the news, Lumentum shares surged in after-hours trading, gaining more than 10%. Neither company has announced specific deal terms or a timeline.
3. TPG is in talks to acquire a U.K. data center company in a deal valued at around $5 billion. Discussions with seller Elliott Management are ongoing, and there is no guarantee a deal will be reached.
4. DoorDash is in advanced talks to acquire grocery delivery platform Instacart in a deal valued at around $17 billion. An agreement could be officially announced as early as Thursday morning.
5. Utah has filed criminal charges against prediction market platform Kalshi, accusing it of promoting illegal gambling. New York, Washington and other states have previously filed lawsuits against Kalshi over similar issues. Kalshi has also hired former Obama adviser Schultz.
6. Deutsche Telekom has reportedly halted plans for a large-scale merger with T-Mobile, and related efforts have been put on hold.
๐ Industry and Company News
1. Samsung Electronics reported final third-quarter results, with revenue of 195.3 trillion won, slightly above preliminary figures, and operating profit of 107.4 trillion won, in line with preliminary figures. Consolidated revenue was $141.1 billion and operating profit was $77.5 billion, up 126.88% and 783.11% year over year, respectively. The chip-focused DS division accounted for about 99% of the company's total operating profit.
2. Samsung Electronics expects the chip supply shortage to worsen further next year and plans to begin production of HBM4E high-bandwidth memory for AI accelerators in the first half of next year.
3. China's first Ascend 950DT 1,024-card AI computing cluster has gone live in Wuhan. Each node is equipped with 1,024 Ascend NPU accelerator cards, delivering 1 EFLOPS of FP8 computing power. Tianji 300, developed by domestic GPU maker Iluvatar CoreX, outperformed Nvidia's H200 in real-world testing.
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