Digging in on the first round of Big Tech earnings, and What’s Next for the Fed 10/29/25

0:02Live from the Nasdaq Market Site, in the heart of New York City's Times Square, this is Fast money. Here's what's on tap tonight. A$10 trillion night of earnings. We'll dig into the results from a trio of big tech stocks and a bunch of names of others on the move after hours. And the Fed in focus, the central bank cutting rates as expected. But saying another one this year is far from certain. The impact on markets and what to expect from the central bank through year end. Plus, the headline sending fintech Fiserv to its worst day on record. Caterpillar digs up some big gains after earnings and Boeing shares grounded after the company takes a massive charge.

0:35What it'll take for the stock to get back off the runway. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Karen Feinerman, Dan Nathan, Guy Adami, and Michael Kantopoulos, Deputy Chief Investment Officer at Richard Bernstein Advisors. Great to have you, Michael. And we start off with that monster night of earnings from big tech to big burritos. Nope. Yeah, big burritos. We're watching all the after hours action in these stocks. Julie Warson's Ildian on the Metacall. Steve Kovac has got all the details on Microsoft. Kate Rogers sipping on Starbucks, chomping on some Chipotle.

1:03We start off with Alphabet trading at new records after beating revenue estimates. Mackenzie Cigales is digging into those numbers. Hey, Mac. Best results show clear upside from its AI push. The biggest concern going in was Search, its core revenue engine, and a key read on both the ad market and whether Gen.ai is starting to cannibalize the business. But that segment beat by one and a half billion dollars. It's chatbot Gemini now has 650 million monthly active users, not far behind chat GBT's 800 million weekly. cloud also showing strength, topping estimates on the back of new AI deals with Meta and OpenAI.

1:39CapEx is expected to hit$93 billion at the high end as Alphabet races to build infrastructure to meet demand and stay competitive with other hyperscalers. Now, its backlog, a read on future cloud revenue still trails Microsoft, Amazon and Oracle, but that doesn't yet reflect last week's deal with Anthropic. And Mel, LSEG, has just pushed out an EPS comparison for Alphabet that excludes the EU fine impact. It's a beat at$3.10 adjusted versus$2.33 expected. And the call, that's starting in about a half hour from now. All right. Keep us posted, Mac. Thank you. Mackenzie Cigalas in San Francisco. Karen, you made the excellent point, as always, that going into this quarter, the bar was extremely high in terms of the move in the stock.

2:22Yeah. So extremely high going into this afternoon, a giant, giant run. And still, they managed to beat on almost every metric, which was really, really impressive. I mean, And she talked about, Mac talked about the search fear, which was it could still be there for sure, but it isn't happening right now. And in fact, we might even be seeing could this be even better than we thought. So there's that, which is huge, which obviously drives most of the business. Then you had some good numbers from YouTube. We had the cloud also. That was very good. And there's still a lot of momentum that is not in this quarter.

2:58So, I mean, just it feels like, remember two years, was it two and a half years ago? Maybe it was two or three years ago when Microsoft announced the AI partnership. Microsoft seemed to be just, you know, so far ahead of Google out of the gate. And that was the way it was for a while. Now things seem to really feel like they're changing somewhat. Yeah. And so some excellent momentum here. It's still not expensive here. I think let's hear the call. Let's hear about the spend. But there was really a lot to like here. And it's up a lot. But still, if you think about where they are in their evolution and where they are, the momentum that they seem to be having and the multiple that it trades at, all of that is pretty good here.

3:45So that existential threat to the core business of search seems to be at least put to the side at this point. And the gap between it and ChatGPT seems to be narrowing as well, which is also the concern. And don't forget also about their chip deal. And their chip deal. But here's the thing. They're two very different businesses, right? So Microsoft accrued all that market cap. They had that deal with OpenAI out of the get-go. They have an ownership stake of it. They just saw that transfer. And so now it's, I think, valued at$135 billion or something like that, which is great for Microsoft. But Microsoft's deal with OpenAI was really to leverage off Azure, to put their models on there and then create product across their suite of services to upsell enterprise clients.

4:22What's going on with Google and Gemini is very different. So two years ago, when they launched BARD, which was the predecessor of Gemini, it was just a disaster. The rollout was horrible. And I think a lot of investors were like, listen, these guys are only going to cannibalize this amazing business, which is, you know, digital ad business. And so now Google Cloud has been gaining on AWS, which is the number one market share. And then you have Microsoft Azure in the number two spot. But the problem with cloud gaining is that it's becoming a greater percentage of their revenue and at a much lower margin.

4:56if you think about it, right? So that's kind of bringing down the gross margin for this business. But I would say, if you're going to compare it to OpenAI, the way that they are growing users, and obviously they are monetizing it very differently than OpenAI will. OpenAI will have to eventually do it with ads and a whole bunch of other services. So what I think investors have come around to is that they're not cannibalizing that ad business as much as a lot of folks thought. I think there were some analysts that we've had on there and said this is an existential threat. But if you look at Google overlays, they're actually a really good way to Google search.

5:29So a lot of good things going on there. I'm not sure you run after it. I think Karen's point is that, you know, trades at a multiple, it's pretty reasonable. I think if you're looking at that versus meta right now, they trade at similar multiples. And I think what Google has going on is far better, in my opinion, than what meta has going on. I'd agree with that. I think Google's a little cheaper, but I'm with Karen on this one. And the first$100 billion quarter, operating margins were better than she was looking for. Yeah, YouTube is still a thing. and Dan is right about in terms of their cloud business.

5:54But the cloud business is growing in a way that you want to continue to see. It's been lower left, upper right now for quite a long period of time. I'll say this. People are going to start to chase here in terms of analysts. They're going to start looking at the multiple, say, you know what, in this environment at 27 times, maybe next year, 26 and a half, it's too cheap. You put a 30 multiple on this, there's no reason this couldn't be a$320 stock. I think you're going to start seeing price targets raised on the back of this. Let's move on to the next big cap tech stock, Metashares. They are sinking in the after hours despite beating street estimates.

6:24The mega cap tech is raising its full year CapEx forecast and saying it expects to spend even more in 2026. The conference call is underway for more. Let's bring on CNBC's Julia Boorstin. Julia, any guidance on 2026 CapEx? Well, CapEx is really a big focus of the call right now. CFO Susan Lee talking about it quite a bit. Both she and CEO Mark Zuckerberg talking about why they are raising their CapEx, saying it's all about investing to drive AI strength and how they need to maintain that position of strength. So they raised the range for 2025 capital expenditures to a range of 70 to 72 billion dollars.

7:01That's up from a prior range of 66 to 72 billion. And the company did not share specific guidance for next year's CapEx. But CFO Susan Lee just said moments ago on the call about the importance of expanding infrastructure capacity to enable meta to seized opportunities, saying they expect CapEx dollar growth to be notably larger next year, saying, quote, we are focused on preserving maximum long-term flexibility to ensure we can meet our future capacity needs while also being able to respond to how the market develops in the years ahead. Now, Lee also saying they expect to invest aggressively to meet those needs both by building their own infrastructure and by contracting with third-party cloud providers.

7:45Now, that could indicate more cloud deals ahead. And Meta has done some big recent cloud deals, a$10 billion deal with Google in August,$14 billion deal with CoreWeave in September, and a$20 billion deal with Oracle in September as well. So, Melissa, now a new category of stocks that might be impacted by all these AI investments. Julia, keep us posted on the call, which is about 38 minutes in. Julia Boorstin, once upon a time, higher capex was rewarded definitively by the stock market. Have we hit a point, Michael, in your view where we are reassessing? We need to see ROI, and it is the turn here in terms of capex numbers.

8:24Yeah, Melissa, I think that's absolutely the case. I think we're going to see more and more of this over the coming quarters. You know, many of these tech stocks, the tech sector in general, was so attractive for so long because it was viewed as cap light. CapEx light. And now it's CapEx heavy. You know, it's very similar to like an energy and exploration company within the energy space that constantly has to drill new wells in order to realize growth. These guys are all saying we have to invest ever larger amounts of CapEx in order to keep up with AI growth. And I think the value proposition, once you get to these levels, starts to diminish and the return on investment becomes much, much harder.

8:57Yeah. Karen. Yeah. So this is sort of what I was afraid of, that earlier on CapEx was seen as good. What does the word notably mean here? I don't know. I'm scared of it. I feel like notably is more than 10%. That wouldn't be notable to you, would it? I don't know. It seems like more than 10, which is, I think the street was looking for maybe, I don't know, a little over 10%. I think it'll be more than that. I mean, the underlying business is really doing well. They are getting returns. We see growth there, but I don't know that we're getting the returns on this kind of spend yet. So it's concerning somewhat.

9:35I think we'll hear what they have. I feel like they should just rip the Band-Aid off. What do you think the number is going to be? They should tell us what they think the number is going to be for CapEx. I mean, the backdrop, though, is that Meta has always been given sort of the luxury, the benefit of the doubt, because every dollar of CapEx would benefit their own bottom line. But, I mean, we were talking earlier about, you know, Lama 4, not so great. I mean, so what are the results of all the spending? Yeah, I mean, meta AI is like a distant behind all those other chatbots that we're seeing right now.

10:06And they're trying to fix it. They went out to spend hundreds of millions of dollars. They want to do this research lab. They're kind of saying, don't look here right now, look there. We want to do superintelligence. And, you know, when you talk about what they're getting out of this, obviously, like ad targeting has been really good. I think a lot of the metrics are demonstrating that. At a certain point, you're kind of going to hit a wall. And then they're going to have a lot of competition. If you think about how is open AI going to monetize chat GPT, they're going to get in the digital ad game.

10:28Like that's going to be a big way of how they do it. So you're going to see pressure around the whole space. But the one thing I'd mention about this build out of these data centers, there's just now starting to hit the debt markets. Right. And you think about this deal that Meta just did to build this data center in Louisiana. Well, they're basically taking a 20 percent stake. There's going to, you know, Blue Owl is lending them 27 billion dollars. It's going to go into a special purpose vehicle. And, you know, it's all this stuff, man. And some of that debt is literally going to be issued at 1 % above.

10:59Like it's going to be, Mike can get in here. It's going to be like junk. And then it's going to find its way into all these ETFs and all these big debt portfolios. So all of this stuff is becoming very financialized. And we've been talking about this for a couple of years. These companies have been funding this build out through their cash flow and through their large cash balances. And now it's hitting a wall because 30 % of their revenue, it's got to stop at some point, right? So this is, to me, the spot. And Oracle is in the worst spot of all of them. I think their debt to equity is at like 500 % or something like that.

11:27They're going to be the ones holding the bag, then the neoclouds, and then these guys, because they've done this off-balance sheet stuff, it's probably going to end up pretty good for them. Yeah, this is where you get the parallels to the late 90s and early 2000s. You had a tremendous amount of debt issuance going to build out basically the fiber optic network that became Fios and everything else. Now, you had, in fairness, you had companies doing this that really had no business levering up their balance sheet and ultimately went bankrupt. I don't think we're worried about that with respect to the Mag7 and some of these larger tech companies.

12:00But the story still rhymes. And you are starting to see a lot of this debt. You're also starting to see guarantees now from some of these players to smaller, you know, infrastructure companies, construction companies, et cetera. And that's a new thing that we're seeing in the debt markets. It's guarantees by Google for someone to build out a data center and issuing debt in order to do that. That's when that's never been done. That always makes me a little bit nervous. So they took a$16 billion charge. So if they had not taken that, EPS would have been probably 10 percent better than expected. It would have been seven and a quarter.

12:32The street was at about 665. They beat revenues by about, I think, 4 percent better than the street was looking for. Margins are now north of 40 percent. I get it that people are concerned about the spend. What are they going from, 69 to 71 billion? I mean, to me, that's a bit of a rounding error. But I understand this level that we're looking at now is where we traded down to at the end of July and held. So I actually think you buy Facebook here. I think that the scare of the spend isn't this year. It's 2026. But I hear you. I think. Do you remember those? I don't know, two, three years back when it was the metaverse spend.

13:05Right. And so the street gave him some leeway for a while that, you know, he deserved it. Efficiency. And then it was the year of efficiency. I don't know if the year of efficiency awaits us. It doesn't sound like it's in 2026. I don't think so. Not with a notable increase. Notably, that is, yeah, I think not. All right. Let's get to Microsoft now. Shares are dropping despite the company being top and bottom line estimates. The conference call kicks off later this hour. For more, let's bring in CNBC's Steve Kovacs. Yeah, on the surface here, you've got beats across the board, Melissa. But you see the stock still down.

13:33EPS was a beat. Revenue was a beat. And even Azure cloud growth was a big beat here, 40 % compared to the 38.2 % expected. But it's really unclear what's dragging the stock lower. Intelligent Cloud only beat by a tiny bit, perhaps also a run-up of the shares into earnings. They hit that$4 trillion market cap as well this week. Maybe beating expectations but not annihilating them was part of the thing here. Now, look, we get the call at 530. We're going to get guidance. We're going to get CapEx spending estimates for the December quarter and a read on when Microsoft is going to catch up to AI demand.

14:09That was supposed to happen by the end of this year. One other interesting nugget here, guys, to talk about the OpenAI stake. That resulted in a$3 billion negative impact to net income. So the losses at OpenAI are starting to drag even more on Microsoft's net income, guys. All right, Steve, keep us posted. Thank you, Steve Kovac. This is the trick with Microsoft. The call doesn't start until later. We don't have guidance, so I don't know how we trade it. But, Guy, go ahead. Well, there's nothing not to like here. I mean, it's a tremendous quarter. I mean, I just think it came down to valuation.

14:42Not good enough at this valuation to get the continued move to the upside. People will point to the technical levels that we just stopped at. It was a prior high we saw a few a month and a half or two months ago. So technically, maybe it sort of made a bit of a short-term double top. But, you know, again, it's a valuation thing. It's not anything to do with the quarter because I think the quarter is very good. Yeah, you know, we go back to the last quarter and the stock had a huge gap. It just looked like you could not find anything wrong with that quarter. The stock opened up 8%. The first tick the next day was an all-time high, and then it closed that day on the low.

15:12And then for the next, you know, I want to say a couple weeks, it just didn't see an uptick, and then it consolidated. So we had this recent run. And I got to tell you, the recent run over the last week or so really felt like a bit of a blow off top. Some of the names that we've seen just blow out that are just down the stack as you think about, you know, generative AI. And some of these larger ones are getting harder to push around, xNVIDIA, I guess, because that didn't have a hard time. 78 days between going from$4 trillion to$5 trillion in market cap. So, you know, pretty astounding. I also mentioned that NVIDIA, with all this stuff, is not up.

15:44It's just trading flat. It was having a good day this morning. It traded, you know, closed pretty well. So NVIDIA, to me, is going to be a really interesting one to watch because if you're looking at Microsoft, you're saying, I can't find too much to pick out here and it's down a little bit. At some point, you know, something's got to give in the NVIDIA trade. The bar was not high going into this quarter for Microsoft necessarily. I mean, it wasn't ramp higher or anything like that into earnings. Right. I just want to talk about something Dan brought up. So NVIDIA is actually a little bit lower.

16:08AMD is a little bit lower. Oracle is a little bit. So I don't know if they were front running this expectation of all this additional spend. And the idea of it doesn't matter who gets a new deal. Everybody trades up now. Right. We saw that with AMD. That's sort of an interesting phenomenon that I actually find a bit troubling. Yeah. You look at these earnings that we have so far, Michael, and I know the conference calls aren't complete. They're not ongoing. But what is your takeaway at this point in terms of big cap tech, the ability to lead the markets here? Yeah, I think, listen, much of what we've seen over the last three or four months for me has not been earnings driven.

16:46It's been more liquidity driven than anything else. And so now earnings have to basically catch up to this massive liquidity driven rally that we've seen. And so regardless of the expectations for earnings, I think it's actually because the price appreciation has been driven by so much liquidity, you almost have to beat the liquidity expectations in a way. These new expectations set because of liquidity. And that's going to be really, really hard to do. Going into this earnings season, I think the number one MAG7 last 12-month net income year-on-year growth guy was number 75 or something in terms of S &P 500 companies.

17:21There are a lot of other companies growing more than MAG7. And I have a suspicion that after this earnings season, we're going to see a continuation of that broadening in earnings growth. Coming up, we'll be keeping an eye on all the big tech movers after hours. Google and Microsoft's calls kicking off in just a few minutes. The headlines from those, plus the numbers out of Chipotle and Starbucks. That's next. And it's not just earnings. Another rate cut from the Fed today. What it did to stocks and what Chair Powell had to say about the central bank's future plans. Don't go anywhere. Fast money's back in two.

17:55Welcome back to Fast Money. More after hours action, this time in the restaurant space. Chipotle and Starbucks both on the move following their latest reports. Kate Rogers has been locked in on the conference call. She joins us now with the latest wow on CMG, Kate. I know a lot going on here, Melissa. We'll start there. So those third quarter results essentially in line for Chipotle, but you saw the stock moving lower by 13 percent. The company lowered its full year same store sales guidance now for the third quarter in a row. It now expects low single digit declines versus a prior forecast of flat.

18:23CEO Scott Boatwright telling me in a CNBC exclusive interview that macro pressures were part of that guidance cut. Take a listen. We've seen about two or three really macro step downs, which accounted for about two or three hundred basis points of growth. And so we think that we may be in another cycle of a step down here with what's going on in the economy right now. You had to look no further than, you know, what the Fed chair was saying just as early as this morning around, you know, wage growth as well as jobs markets cooling. And then the government shutdown certainly isn't helping things.

19:00Now, he tells me the company plans to lean further into messaging around its value proposition, which Boatwright says is still around$10 for entrees, which is a value in this market. And Melissa, moving on to Starbucks, it did have a mixed quarter EPS missing, but revenues a beat. Its same-store sales, though, big news, turned positive globally. They were flat in the U.S., up 2 percent in China. Key for investors, though, comps turned positive in North America in September, remained positive in October, executives said. And reminder for those paying attention, comps have been negative in its key U.S.

19:29market for the last six quarters. And while, again, they were still flat in this most recent quarter, that trend of turning positive in September and October is meaningful, Melissa. Back over to you. Kate, did you get any color from Boatwright about the specific macro pressures and in which demographics are being hit specifically? Something he said that was really interesting is that the 100K and under cohort between mid 20s and mid 30s in terms of their age range, Melissa, are dining at home more. He doesn't suspect that they're losing market share to any of their competitors. He just feels that those younger consumers that are making less than$100 ,000 a year are eating at home more, again, not going elsewhere.

20:09But that's a really key demographic for Chipotle. He says they're still gaining share with that crowd, but that's something that they did notice in this quarter, and that some of those macro pressures he suspects will continue into the first half of next year, but then hopefully things will turn around again. He also said they're going to be really conservative on pricing and try to not pass on tariff pricing in particular to consumers, which I thought was interesting. Kate, thank you. Kate Rogers. Do you think things are going to turn around, Michael, after the first half of next year? Well, that's still a long time from now, Melissa.

20:39You know, nine months. Who knows what's going to happen? But I think between now and then, there's certainly, you know, we're living in this K-shaped economy where the lower end consumer is having a really difficult time. They're having a hard time finding jobs. You're seeing that with recent college graduates. You're seeing it in the subprime auto space. You're seeing it time and time again. And discretionary has taken a hit because of that. I mean, I think, what, discretionary is up maybe 4 % year to day, something in that neighborhood. So, yeah, I think you're going to continue to see a bit of difficulty here with the consumer.

21:09I think we're starting to see similar to the markets, right? You have the large mega cap growth doing well and a lot of other stocks not doing nearly as well. It's the same thing with the population. Right. Where did you go? You went to that Harvard place, right? Exactly. Harvard Business Review. No, she went. Harvard College. No, nothing wrong with that, by the way. But they do the Harvard Business Review. They do these studies, right? All sorts of things. All sorts of things. Chipotle will be one of the things they talk about. And here's the reason. I think we've actually done a decent job. On the way up, when comps are continuing to grow and margins are doing well, nobody freaking cares about valuation.

21:45When the comps start to flatline and go the other way, everybody looks at valuation. So go to December of 2024 when they were growing and then it stopped and look what the stock has done since. I guess if there's good news,$34 should be a level. That was the October 2023 low. But now valuation is going to start to be under the microscope. And it's still expensive here. Still at 33? Mm-hmm. Ask Karen. She's looking at it. Yeah. I think it still will have a three handle, even for price earnings. I mean, this is a difficult quarter. And it doesn't seem like the momentum. You don't get the sense that the momentum is going to stop right here.