Latest Stocks analysis · 28 October 2026
The AI Trade Is Back, and Tonight Microsoft and Alphabet Must Justify It
SK Hynix's surging profit and a $63 billion compute financing structure lifted tech shares on Wednesday, shifting focus to capital expenditure reports from Microsoft and Alphabet.
Semiconductor rally revives tech momentum
United States equity futures advanced on Wednesday as semiconductor gains revitalized the technology sector ahead of evening corporate reports from Microsoft and Alphabet. S&P 500 contracts rose 0.2% and tech-heavy Nasdaq-100 futures gained 0.3%, while Dow Jones Industrial Average futures traded flat.
The renewed momentum followed a Tuesday rally sparked after Broadcom's chief executive negotiated a $63 billion financing structure with a consortium of banks to construct artificial intelligence compute capacity. Hardware enthusiasm expanded further on Wednesday after South Korean memory manufacturer SK Hynix reported that quarterly profit grew 632% year over year. In premarket trading, United States-listed shares of SK Hynix rose 8%, South Korean shares of SK Hynix jumped 10%, Samsung Electronics gained 5%, and Micron rose 2%.
Hyperscale capex faces immediate scrutiny
Why it matters: For equity investors, the evening earnings announcements represent a critical test of whether massive capital commitments across cloud infrastructure are translating into durable software demand or merely squeezing corporate margins. If hyperscalers signal that their multi-billion-dollar investments cannot yield near-term revenue acceleration, the broader market rally risks losing its primary valuation anchor.
Both Microsoft and Alphabet scheduled updates after Wednesday's closing bell detailing customer demand and infrastructure spending plans. The corporate disclosure follows cost adjustments at Microsoft, which offered buyouts to up to 60,000 employees in an effort to streamline corporate operations alongside its artificial intelligence expansion.
Market participants noted that infrastructure spending projections remain the principal test for market sentiment. Jai Malhi at Vanda Research said that positioning adjustments had created room for a tech rebound, but warned that capital expenditure guidance from major hyperscalers presents an immediate hurdle that could keep cautious investors on the sidelines until numbers arrive.
Federal Reserve decision looms over valuations
Broader market direction also confronts macroeconomic crosscurrents on Wednesday afternoon, when the Federal Reserve delivers its interest rate decision at 2 p.m. ET. Central bank policymakers are widely expected to hold borrowing costs steady despite elevated inflation readings, with investors watching Fed Chairman Kevin Warsh's scheduled press conference for signs of policy tightening.
The monetary policy backdrop adds event risk to an equity market already pricing aggressive corporate spending. Kathleen Brooks, research director at XTB, said that investors risked treating the policy gathering as an afterthought, noting that United States interest rates are projected to rise as much as 75 basis points over the next year after central bankers voted unanimously last month to increase borrowing costs.
Cross-asset pressures also emerged from energy markets, where West Texas Intermediate crude rose 1.9% to $101.78 a barrel. The commodity climb followed reports that the United States may resume military strikes on Iran after next week's midterm elections, underscoring the delicate macroeconomic backdrop awaiting Big Tech's financial results.
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