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$710 billion. That's what Amazon, Microsoft, Google, and Meta just told the market they will spend on AI CapEx in 2026. Pichai said the quiet part out loud: "We are compute-constrained."
The S&P closed Friday at a fresh record 7,230 (+0.3%), the Nasdaq at a record 25,114 (+0.9%), both posting their best month since 2020. Apple did most of the Friday lifting after a $111.2B revenue beat. The Dow slipped 153 points to 49,499. WTI cooled to $102.28 (-2.7%) on Iran de-escalation signals, but the national gas average still hit $4.39, up from $4.06 a week ago.
THE RUNDOWN
CapEx › THE $710B SHOCK › Amazon at $200B. Microsoft at $190B. Google at $185B. Meta at $135B. Every one of them raised guidance this week, and Pichai's "we are compute constrained" line was the most consequential CEO sentence of the quarter. The signal isn't just the size; it's the dispersion. Stocks that turn CapEx into revenue today (AAPL, AMZN, GOOGL) ripped. Stocks where the spend is still a 2027 story (META -8.6% Wednesday, MSFT -3.9%) got punished.
APPLE › $111.2B AND A $100B BUYBACK › Apple delivered Q2 revenue of $111.18B vs $109.7B est and EPS of $2.01 vs $1.95. iPhone revenue at $56.99B narrowly missed $57.21B, but Cook described demand as "off the charts" with chip constraints limiting orders. Services hit a $120B annual run rate, the buyback authorization went up by $100B, and next-quarter revenue guidance of 14-17% YoY blew past the ~11% consensus. Stock closed up 3% Friday.
FED › MOST DIVIDED VOTE SINCE OCTOBER 1992 › The Fed held at 3.50%-3.75% as expected, but the 8-4 split was historic. Stephen Miran dissented in favor of an immediate quarter-point cut. Cleveland's Beth Hammack dissented the other way, saying it's no longer appropriate to signal a rate-cut bias. Powell confirmed it was his last press conference as Chair and will stay on as a Fed Governor past May 15. Kevin Warsh advanced through the Senate Banking Committee.
OIL › UAE BOLTS OPEC, PUMP DOESN'T BUDGE › The UAE said it's leaving OPEC and OPEC+ effective May 1 and will gradually boost production. WTI fell 2.7% Friday on Iran de-escalation signals via Pakistani mediators. Gas didn't get the memo. National average $4.39, up from $4.06 seven days ago.
TARIFFS › TRUMP TARGETS EU CARS NEXT WEEK › Trump posted Friday that the EU isn't complying with the agreed trade deal and tariffs on European cars and parts go up next week. Watch BMW, Mercedes, Stellantis, and US-listed parts suppliers at Monday's open.
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THE PLAY › THE $710B SORT
The headline is $710 billion. The story is what the market did with it.
CapEx guidance landed on Wednesday. The reaction was nothing close to uniform. Meta dropped 8.6% on guiding to $135B (up from $125B). Microsoft dropped 3.9% on $190B and "high memory costs." Google rallied to all-time highs. Amazon held flat after AWS reaccelerated to 28.4% YoY, the fastest growth in 15 quarters. Apple, which barely spends on AI, ripped 3% Friday on a $111B revenue print and a $100B buyback.
That's not a market that hates CapEx. It's a market sorting it.
The dispersion is the signal. Compute-leveraged names (Apple Services, AWS, Google Cloud) get rewarded because CapEx is showing up in revenue today. CapEx absorbers (Meta, Microsoft) get punished because the spend keeps growing while the monetization story is still a 2027-2028 conversation. Pichai's "compute constrained" framing is bullish. Zuckerberg's $135B at this stage of the build isn't.
Why the Fed split matters here. Hammack vs Miran is shorthand for the stagflation question. Oil at $102, gas at $4.39, a labor market that's softening. If the FOMC can't agree on direction, the dispersion trade gets a second engine: a wider gap between defensive cash flow names and CapEx stories needing patient capital.
The trigger. AMD reports Tuesday after the close. JOLTS lands Tuesday morning. If AMD comes in light on AI accelerator revenue, the CapEx-absorber names get a second leg down. The tell is the SMH/IGV ratio (semis vs software). Semis are leading. Software is bleeding (IBM -7.5% last Thursday, ServiceNow -18%). Watch the gap on Wednesday's open.
One tactical close. New Series I Savings Bonds issued May 1 through October 31 carry a 4.26% composite rate (0.90% fixed, 3.34% inflation component). Cap is $10K per person electronically. With the 10Y at 4.38% and stagflation pricing back in the bond market, government-backed inflation protection at 4.26% is worth a slot for the cash you don't need inside 12 months.
RALLIES RADAR
ChatGPT was given $100K in the Rallies arena at the start of March. Two months later, that portfolio is worth $140,385. The model is beating the S&P 500 by a wide margin in the same week the S&P just had its best month since 2020.
Monday: Berkshire's first earnings report with Greg Abel as CEO. We'll break down what changed and what didn't.
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BRIAN FERLODI ON WHY MOST INVESTORS LOSE MONEY IN GREAT STOCKS
"Look at the seventy-year history of Berkshire Hathaway. Does it get any bigger, more predictable, more reliable, more durable, more well-managed than Berkshire Hathaway?"
"Top tick to bottom tick, that stock fell 50% or more 4 times over its history, including a 50% drop during the height of the speculation in 1999. NASDAQ all-time high, Berkshire all-time low."
"The only way you can survive the volatility that is guaranteed to hit any stock you own is by having the internal conviction that you know the company well enough and you believe in the long-term future."
"I've been a Netflix shareholder for 16 years. Peak to trough, that stock has fallen 80% twice. Both times, holding or buying more was the correct long-term thing to do, even though the short-term pain was immense."
"The only reason I could do that is because I knew the company well, I knew the management team well, and I believed in the business long-term."
WOLF Financial provides market commentary and educational content for informational purposes only. The views expressed are those of the individual authors or analysts and do not constitute financial, investment, or trading advice. Nothing published by WOLF Financial should be relied upon as a recommendation to buy, sell, or hold any security or asset. Investing in securities, ETFs, and digital assets involves risk, including possible loss of principal. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial professional before making investment decisions.
Disclosure: This content is a paid partnership with Leverage Shares. This information is for informational purposes only and is not investment advice. Investing involves risk, including possible loss of capital. Please read the prospectus before investing.