The week Big Tech stopped paying its own way

1. The buyback became a sale

Meta Platforms (META) sold $25 billion of stock at $625 a share early in the week, plus $12.5 billion of preferred stock paying 6.5%. Nvidia (NVDA) committed $3 billion and AMD (AMD) $1 billion. Both sell Meta its chips. Meta closed Friday at about $615, below the offer.

Alphabet (GOOGL) showed where that road leads. Through September it bought back no stock, sold $42.9 billion of new shares and borrowed $85.2 billion. Free cash flow was negative $9.1 billion last quarter, even though its cloud revenue more than doubled. The stock fell 12.6% on Thursday.

Amazon (AMZN) posted its highest operating margin ever. Its free cash flow over the past 12 months was still an outflow of $42.4 billion. Oracle (ORCL) did the opposite of selling. It capped new outside funding at $20 billion through 2030 and rose 10.6%.

Investors stopped grading AI by how much a company spends. They started grading it by who pays.

Read more: Meta priced $25 billion of common at $625 | Oracle capped new funding at $20 billion

2. The Fed argued for a hike, then held

The Fed kept rates at 3.75% to 4% on Wednesday by a 10-2 vote. Two officials wanted a hike. Chair Kevin Warsh called growth strong and inflation "too high," and said he was "unwilling and unable" to call financial conditions tight.

The data backed his description. Third-quarter GDP grew at a 3.4% rate as investment sped up. Core PCE inflation rose to 3.1% in September. Compensation costs rose 0.8% in the third quarter, but after inflation, wages and salaries were down 0.6% from a year earlier.

The bond market split the decision. Five-year yields slipped after the statement, while the 30-year rose to about 5.36% on Wednesday. It ended the week near 5.31%. Canada hiked the same morning. By Friday, prediction markets priced a December hike near 73%.

The Fed is waiting. The long end of the curve, where homebuyers and Big Tech both borrow, is not.

Read more: The bet on a Fed hike fell to a nickel. The real question is December

3. AI's bill reached the PC

Intel (INTC) grew data center and AI sales 78%. Then it guided fourth-quarter revenue to $15 billion to $16 billion, against about $17.07 billion expected, and fell almost 29% on Friday.

The cause runs through memory. CEO Lip-Bu Tan blamed "one of the most significant supply shortages in the history, driven by the unprecedented demand for Super Intelligence." AI data centers are absorbing memory chips. What's left costs more, and PC makers can't get enough. Intel now expects PC units to fall about 12% this year and another 10% in 2027. It also cited an explosion at its plant in Israel.

The whole chain fell. Dell (DELL) dropped about 11%, and AMD, Qualcomm and Arm about 10% to 11% each. Even Micron (MU), which sells the scarce memory, lost about 5%.

For a month the question was who pays for AI. Intel added a second one: what the build takes from everyone else.

Read more: Intel's drop deepened in regular trading

4. Lenders said yes, at a price

Microsoft (MSFT) sold $25 billion of bonds on Thursday, its first U.S. investment-grade deal since 2017. Orders topped $115 billion, Bloomberg reported. The longest note, due in 2066, pays 6.35%. Microsoft still produced $18.6 billion of free cash flow last quarter. It borrowed anyway.

Private credit got its own price check. Ares Capital (ARCC) agreed to buy MidCap Financial Investment (MFIC), an Apollo-managed lending fund, for about $10.88 a share. That's about 85 cents on the dollar of the fund's own stated value. MFIC's stock still jumped about 23%. The market had valued it near 65 cents.

Elsewhere the money kept flowing. Funds managed by Apollo affiliates committed all the financing for ADT's $15.3 billion buyout. Blue Owl (OWL) raised $12.6 billion last quarter.

Credit isn't scarce. Trust in the marks is.

Read more: Ares Capital agreed to buy MFIC at about 15% below its stated value

5. Crypto found its off switch

An attacker pulled about $6.3 billion out of Binance on Thursday, the largest crypto theft on record. Within hours, about $3 billion was frozen, mostly by stablecoin issuers like Tether and Circle that can block an address. Much of the rest went into bitcoin and ether, which no one can freeze. Binance says it will cover all losses and aims to reopen withdrawals by Sunday.

The public crypto stocks took the hit. Coinbase (COIN) fell 12.7% for the week to a 52-week low. Its market value, near $38 billion, now sits below the $40 billion that private investors just paid for Kalshi. Bitcoin lost about 5% for the week, to near $76,700.

The money is moving. Robinhood (HOOD) now earns more from event contracts, $173 million last quarter, than from stocks or crypto. Kalshi raised money a day after Utah charged its founders over sports contracts.

Crypto's best defense on Thursday was the money someone could stop.

Read more: Binance put the damage at about $6.3 billion | Coinbase executives set up plans to sell shares

6. Brazil's 82-cent trade lost

At 1:47 p.m. last Sunday, Polymarket priced Flávio Bolsonaro's chance of winning Brazil's presidency at 81.4 cents. That evening, Lula won 51.8% to 48.2%.

Monday, São Paulo tripped its circuit breaker at the open. Brazil's Treasury canceled its fixed-rate bond sales. The iShares MSCI Brazil ETF (EWZ) ended the week down 23.8%, far more than the roughly 11.5% it gained after the first round.

The warning was there. Currency traders were paying the most since 2011 for protection against a weaker real nine days before the vote. The betting markets priced the likely winner. The hedgers priced the damage from the other one.

An 82-cent price means the other side wins about one time in five. Too many investors owned the 82 and ignored the 18.

Read more: Brazil's election trade took three weeks to build

THE MARKET SIPS TAKEAWAY

AI demand didn't break this week. The way it gets funded changed. Big Tech moved from spending spare cash to selling stock and bonds, and the market started pricing the difference.

That puts the long end of the bond market at the center. Big Tech, private lenders and the Treasury all need the same buyers, while the Fed says inflation is too high.

The read holds if the 30-year stays above 5.3% and AI issuers keep paying up. It breaks if buybacks return or long yields fall with growth still strong. Tomorrow, we look at the week that tests it.

UNTIL THEN, SIP SLOWLY!

The Market Sips Desk

REPLY PROMPT: If you had to fund AI's next $100 billion, would you buy the stock, the bonds or neither? Hit reply and tell us why.