👻 Tech’s tricks and treats

Prev: Plus, another huge week ahead | [Finimize]( Your Weekly Brief should take you 3:14 minutes to read. Let us know [what you think here]( Weekly). [Very Superstitious] Very Superstitious Investors are on a knife’s edge. Big Tech served up about as many treats as tricks in its quarterly updates last week. But major indexes slid, pulled down by Alphabet, Meta, and Apple. And there’s another monster week ahead. 👀 WHAT JUST HAPPENED? US - Microsoft and Alphabet kicked off Big Tech earnings week on Tuesday, with Microsoft’s results up in the clouds and Alphabet’s firmly on the ground. Meta kept the ball rolling on Wednesday with good numbers but a gloomier outlook. And Amazon rounded out the week with perkier results, giving investors a bit of relief. - Consumers drove the US economy to a rapid 4.9% annual growth in the third quarter, defying expectations that the Federal Reserve’s long string of interest rate hikes would send shoppers home. - Chevron announced the second oil mega-deal of the month, agreeing to buy smaller producer Hess for $60 billion. Europe - Swiss pharma giant Roche got in on the mega-merger action, announcing a deal to buy drugmaker Telavant for $7.1 billion. - The European Central Bank ended a yearlong string of interest rate increases aimed at cooling the region’s inflation, with the bloc seen as teetering on the brink of recession. Asia - China’s government unveiled some new economy-supporting measures, and while they were only small doses of additional stimulus, they were a different flavor. ✍️ WHAT DOES ALL THIS MEAN? Microsoft delivered a quarterly report card worthy of being stuck to the front of the fridge, with cloud-driven revenue growth and profit that surpassed analysts’ expectations. Amazon also aced its quarter, seeing its profit actually triple, with straight-A revenue gains across its cloud business Amazon Web Services (AWS), advertising unit, and retail. Alphabet’s results, while a solid B+, fell short on the all-important cloud metric, which grew at only (only) 22%, compared to Microsoft Azure’s 28%. But Alphabet did score good grades in advertising revenues. Meta, meanwhile, like a student not living up to its potential, seemed to disappoint investors. But its results weren’t actually bad, with revenue growth jumping 23% and the company even signaling its willingness to cut more costs during its big “year of efficiency”. On the macro front, it was a case of oceans apart between the US and everyone else. European economies appear to be teetering on the edge of recession – look no further than the three-year low in PMI data for evidence – but the US economy, by comparison, is beaming. The better-than-expected 4.9% third-quarter US economic growth (and still-above-target inflation) might pile pressure on the Federal Reserve to go back to raising interest rates, even as slow-going European economies have pushed the European Central Bank into a rate-hike hiatus. And then there’s China, which is fighting its own battle against faltering economic growth and a potentially more treacherous foe than inflation – deflation. But a series of baby step measures, including lower bank reserve requirements and lower interest rates (both aimed at encouraging lending), plus last week’s latest gambit – added government spending – might just be enough. After all, recent economic data has suggested the economy could be ready to turn up. Away from Big Tech and big economic data, mergers and acquisitions have made a bit of a comeback. US oil giant Chevron announced a $60 billion acquisition of Hess (the second massive oil deal this month after Exxon’s $65 billion merger with Pioneer), and Swiss pharma company Roche chipped in with a $7.1 billion purchase of Telavant. M&A activity doesn’t move markets on its own, of course, but a rise in dealmaking is a sign of confidence returning in the boardroom. And that’s worth taking note of. 🔍 THIS WEEK’S FOCUS: BIG TECH’S BIG FUTURE The subtext for a lot of these Big Tech results is – yup, you guessed it – AI. Alphabet’s stock got slapped down last week partly because investors saw its cloud revenue slowdown as a sign that its AI game is weak. And there might be some truth to that. Spending related to generative AI added three percentage points to Microsoft Azure’s 28% growth, proving that the software giant’s still out in front. What’s more, its Copilot software has only just landed, and the AI assistant tool could bring in hundreds of millions of dollars all on its own. But all hope is not lost for Alphabet. Earlier this year, investors feared that a resurgent AI-powered Bing (Microsoft’s search engine) would start to nibble at Alphabet’s ad revenues. But judging by Alphabet’s 11% ad sales growth, that business is not exactly in peril. In other words, so far, AI doesn’t appear to be hurting Alphabet’s results, but it’s got work to do to turn the technology to its advantage. For the other three tech behemoths – Meta, Amazon, and Apple (which has not yet reported) – AI is still just bubbling under the surface. Meta’s in spending-and-building mode, offering only glimpses of what it’s up to behind the scenes. (For example, this Lex Fridman [podcast]( with Mark Zuckerberg conducted completely in the metaverse. Very cool.) Amazon, meanwhile, recently bought a stake in AI startup Anthropic, a competitor to OpenAI. That adds Claude 2, a ChatGPT look-alike, to Amazon’s arsenal and could augment its cloud revenues too. As for Apple, well, no one knows how AI might infiltrate our iPhones, laptops, and smartwatches. But you can bet your life that Apple is planning something more than just a souped-up Siri. 📅 THE WEEK AHEAD - Monday: German inflation (October). Earnings: McDonald’s. - Tuesday: Euro area inflation (October), German GDP (Q3), China NBS manufacturing PMI (October), Bank of Japan interest rate decision. Earnings: MSCI, Advanced Micro Devices. - Wednesday: Federal Reserve interest rate decision, US ISM manufacturing PMI (October), Earnings: Qualcomm, Estée Lauder. - Thursday: Bank of England interest rate decision, Earnings: Apple, Moderna. - Friday: US nonfarm payrolls (October), ISM services PMI (October). [StartEngine]( SPONSORED BY STARTENGINE Kevin O’Leary is an investor in this project Shark Tank’s Kevin O’Leary* is a firm believer in this crowdfunding platform. Formerly an investor in StartEngine, having invested in a previous round, he’s now a strategic advisor for the platform, helping shape the future of Venture Capital. He “wanted to compete with [CEO Howard Marks]( straight out of the gate, but after seeing what he had built with the StartEngine team, it made a lot of sense to join him instead.” A community** of two nearly million has collectively committed over $1.2 billion on startup fundraising campaigns, and the platform’s been named one of Inc. Magazine’s [5,000 fastest-growing US private companies two years in a row]( (2022 and 2023)***. Now, you can invest in the same company as strategic advisor Kevin O’Leary: over 40,000 investors*** have already [bagged their piece of StartEngine, and you have until November 15th to join this funding round](. So if you want a piece of this platform, and the $10 trillion market it potentially taps into, [check out the funding round](. [Find Out More]( Reg A+ offering made available through StartEngine Crowdfunding, Inc. No broker-dealer or intermediary involved in offering. This investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment. Please see the most recent [supplement](, [offering circular](, and [selected risks](. *Kevin O’Leary is a paid spokesperson for StartEngine. See his 17(b) disclosure, [(. **StartEngine Community: Count of 1.8 million is determined as the number of unique email addresses in StartEngine’s database as of 10-6-2023. ***Includes $760M in funds raised as of May 9, 2023 via Reg. CF and Reg. A+ combined through StartEngine’s funding portal and broker dealer, StartEngine Capital, LLC and StartEngine Primary, LLC respectively, as well as StartEngine’s own raises. Also includes $470M in funds raised previously through offerings conducted on www.seedinvest.com outside of the StartEngine platform. In May 2023, StartEngine acquired assets of SeedInvest, including email lists for SeedInvest’s users, investors and founders seeking to raise funds. As measured by revenue growth over a three-year period. [Inc 5000 source](. Includes investors over multiple offerings and at different terms. ⏸ Want to turn off the Weekly Review? [Hit pause]( To stop receiving all Finimize emails (including the daily newsletter) [Unsubscribe]( [View in browser](