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The High Five Earnings And The Investing Week Ahead

Market Update

27.10.2025

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What happened last week?

Global

  • Oil prices shot higher as the US and EU announced new sanctions against Russia.

US

  • The US may be dealmaking with some quantum computing firms.
  • Tesla posted record revenue, but still saw its profit drop.
  • US inflation rose in September, but not as much as folks predicted.

Europe

  • UK inflation held steady, boosting hopes for lower interest rates.

Why It Matters

The US announced new sanctions against Russia – this time targeting its two biggest oil firms, Lukoil and Rosneft – as tensions ramped up over the war in Ukraine. The news was swiftly followed by a new set of sanctions from the EU, too, and sent the price of oil up by more than 5% on Thursday. Under the new restrictions, the US could foist penalties on any country or firm that does business with the two oil giants. What’s not clear is where this might leave China and India, their biggest customers.

Some American quantum computer firms were reportedly negotiating to hand hefty stakes to the US Commerce Department in exchange for federal funds – with figures said to be in the neighbourhood of $10 million or more each. Quantum computers are seen as critical next-gen tech. The potential deal with the startups – which include IonQ, Rigetti, and D-Wave – hints at a new playbook for the government, which recently bought a 10% stake in US chipmaker Intel.

Tesla posted its best-ever three months of revenue as US consumers rushed to get behind the wheel of an EV before a federal tax credit ended.

The firm raked in $28.1 billion in the third quarter, comfortably ahead of Wall Street’s $25.3 billion prediction. Still, its profit dropped hard, dragged down by new tariffs. The launch of its Optimus V3 humanoid was delayed again, leaving investors underwhelmed.

US inflation sped up in September, rising to 3% a year – one tick slower than forecast. Still, the news isn’t likely to change any minds over at the Federal Reserve. The central bank’s widely expected to cut interest rates this week, with the job market now a top concern. Friday’s inflation report was released in a rare pause in the government shutdown: the stats were needed to calculate cost-of-living adjustments on Social Security payments.

UK inflation held surprisingly steady at 3.8% in September, instead of rising to 4% as predicted. The pace of price increases was still well above the Bank of England’s 2% target, but, British consumers will take it – and so will investors. The milder result had traders upping their bets that the central bank will cut interest rates again this year and give the economy a much-needed boost.

 

The Focus This Week: Big Tech’s Big Earnings

The Magnificent Seven have been the S&P 500’s top scorers for the past few years. These (literal) MVPs account for about 25% of the total value of the S&P 500, and they’re some of the biggest spenders on AI – the key driver of global stock gains this year. So investors will be watching every replay as five of the giants open their books. For Alphabet, Meta, and Microsoft, game day is Wednesday, and for Amazon and Apple, it’s Thursday.

Three months ago, these hyperscalers’ message was loud and clear: AI demand was far outpacing supply, and they needed to boost their spending to speed things up. So this week, investors will be listening closely to see how that’s changed the outlook.

So far, the hundreds of billions in AI spending have mostly come from the firms’ regular cash flow and from the piles of cash on their balance sheets – not debt. That means they’ve got the capacity to keep on investing in the tech, for as long as they deem it worthwhile.

That said, market players have started asking some tough questions. As AI spending grows, they’re flagging bubble risks, pointing to the strangely circular nature of the AI ecosystem – where companies are buying infrastructure from the same tech giants that fund or rely on them. Those same investors are increasingly questioning whether the financial payoff of this boom might fall short of the massive outlays it’s driving, and whether some of its firms might seriously stumble if this money-go-round starts to slow.

Even so, Wall Street has notoriously underestimated how fast AI investment would grow. The consensus expects AI spending from hyperscalers to slow to around 19% next year, from 64% this year, according to Goldman Sachs. But for this year (and last), initial estimates proved much too low, and were eventually revised way higher. So it’s worth viewing some of the current slowdown predictions with just a dash of scepticism.

The Week Ahead

  • Monday: Nothing major. Catch up on Slow Horses.
  • Tuesday: US consumer confidence (October). Earnings: PayPal, UnitedHealth, Booking, Mondelez, Visa.
  • Wednesday: Bank of Japan interest rate announcement, US Federal Reserve interest rate announcement. Earnings: Boeing, Caterpillar, Alphabet, Meta, Microsoft, Starbucks.
  • Thursday: European Central Bank interest rate announcement, eurozone economic growth (3Q), eurozone employment (September), Japan retail sales (September), Japan unemployment (September). Earnings: Bristol Myers, Eli Lilly, Mastercard, Merck, Amazon, Apple, Coinbase, Strategy (formerly MicroStrategy).
  • Friday: Eurozone inflation (October). Earnings: AbbVie, Chevron, ExxonMobil.

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