Weekly insights + SMS alerts
THE AI TRADE HITS THE BRAKES. A Nasdaq correction. A rebound in oil. And a sharp divide between the companies building AI and the ones putting it to work.
Yesterday's relief rally disappeared in a hurry. The S&P 500 fell 4.36%, while the Nasdaq dropped 5.52% and finished 11.9% below its October record. A decline of more than 10% from a recent peak is what Wall Street calls a correction.
Here is how the major indexes closed on November 5:
Nvidia lost 9.3% and AMD fell 17.3%. Investors are weighing whether rising costs and potential limits on new data centers could slow the AI buildout. The political risk is a concern about future restrictions, not an announced nationwide construction ban.
Rates. The Treasury's 10-year yield fell to 4.84% from 4.90%, and the 2-year dropped to 4.46% from 4.58%. Lower yields mean bond prices rose even as stocks sold off.
Energy. December WTI settled at $90.52 a barrel, up 2.72%. January Brent settled at $98.29, up 3.88%. Both remain more than 13% below last Friday on a comparable contract basis. The war's path and energy supply remain major uncertainties.
Britain. The Bank of England raised its policy rate by a quarter point to 4%, voting 8-1. It expects inflation to approach 5% by the middle of 2027. Korea's Kospi fell 5.3% and Japan's Nikkei lost 1.8%, extending the pressure on AI stocks beyond the U.S.
Google announced a long-term $17 billion investment in its first Wyoming data center, in Laramie County. It says it will pay for all the power it uses and cover the infrastructure needs directly driven by its growth.
The site will use air cooling to limit water use. Even on a day when AI stocks sold off, the physical buildout continued. The spending plan is an announcement, not a completed project.
OpenAI's new community compact pledges to cover the full electricity and added infrastructure costs of future campuses it owns and operates. It also promises financial protections if a project is delayed, reduced or canceled.
That addresses a central local concern: who pays when a giant new customer plugs into the grid? These are commitments whose delivery still needs to be measured.
Revenue rose 39% to $782.5 million. Adjusted earnings, which exclude certain costs, were $0.38 a share, above the $0.34 estimate. Under standard accounting rules, the company still lost $0.10 a share.
Cloudflare expects fourth-quarter revenue of $845 million to $846 million. Its adjusted operating margin rose to 17.5% from 15.3% a year earlier, although its adjusted gross margin narrowed.
Our read: Growth and operating profit improved together. The next test is whether Cloudflare can keep converting demand for internet security and AI services into cash without squeezing gross margins further.
Cloudflare's quarter was its best ever, with its fastest revenue growth in nearly four years. Current RPO rose 37%, and the non-GAAP operating margin climbed to 17.5% from 15.3%.
Third-quarter revenue reached $4.869 billion, up 19%. Nights and seats booked rose 16%. Airbnb also authorized another $12 billion in share repurchases and forecast fourth-quarter revenue of $3.22 billion to $3.28 billion.
Its AI assistant now resolves about 40% of all customer support issues without a human, up from a third in the previous quarter. Support cost per booking fell more than 17% from a year earlier.
That is a concrete AI result: a measured change in service costs inside an existing business. It gives investors a different question from how many new data centers will get built.
Axon's software story kept growing, but the quarter missed expectations. Revenue was $909 million, versus a $934.3 million estimate. Adjusted earnings were $1.72 a share, versus $1.89.
The company excluded $130 million in delayed federal drone-defense deployments from its 2026 outlook. It also lowered its annual free-cash-flow outlook to $350 million to $400 million from $450 million.
AI annual recurring revenue, a measure of subscription revenue over a year, passed $100 million. That growth is real, but contract timing still determines when bookings turn into sales and cash.
AI bookings are up more than 50% year to date, and newer software, including real-time operations, Records, AI, 911 and Dedrone, is approaching a $500 million run rate.
AppLovin stood out. Shares gained about 31% in regular trading after Wednesday's report. Third-quarter sales rose 55% to $2.185 billion. Reported earnings under standard accounting rules were $4.30 a share, above the $4.03 estimate, and fourth-quarter revenue guidance came in at $2.365 billion to $2.395 billion.
Defensive stocks held up relatively. All eleven sector ETFs fell. Consumer staples lost 0.71%, compared with technology's 7.97% decline, a gap of 7.26 percentage points. Relative resilience is different from a positive return.
Amazon made Uber Eats its food-delivery partner for Prime members. Eligible orders of $25 or more through Amazon's website or app get a $0 delivery fee. Taxes, tips and other fees can still apply.
The deal replaces Amazon's arrangement with Grubhub, which ends today, per the companies. Prime members can now order Uber Eats directly through Amazon's website and app, with no Uber account needed.
Visa forecasts 4.5% growth in U.S. holiday retail sales this November and December, the strongest since 2021. But it expects prices to rise about 3.4%, leaving only 1.1% growth after inflation.
Shoppers plan an average $777 in gifts, up from $736. About a third of those earning under $100,000 expect to switch to cheaper brands or stores. This retail forecast excludes travel and dining, so it is one view of the consumer, not the whole picture.
About 27% of shoppers are prioritizing physical stores, according to the Visa data.
The IRS released its 2027 inflation adjustments today. The standard deduction rises to $16,600 for single filers and $33,200 for married couples filing jointly. These are for tax year 2027, generally reported on returns filed in 2028.
For a single filer, the 10% bracket covers the first $12,800 of taxable income. The next layer is taxed at 12%, up to $52,025. Entering a higher bracket changes the rate on the dollars inside that bracket, not the rate on every dollar earned.
Here is the full set of single-filer thresholds for 2027, with the 2026 figures in parentheses:
For benefits enrollment: the 2027 health flexible spending account contribution ceiling rises to $3,500. A plan that permits carryover can allow up to $700 of unused funds into the next year. Employer rules and deadlines vary, and unused money can be forfeited. A higher ceiling is not a reason to contribute more than expected eligible expenses.
Friday, November 6, 8:30 a.m. October's jobs report. FactSet's survey expects 65,000 new jobs and 4.2% unemployment, compared with September's 29,000 and 4.2%. Today's 189,000 initial unemployment claims point to low layoffs, but hiring is a separate question.
Friday, 10 a.m. Preliminary November consumer sentiment. The prior Michigan index was 48.0. Charter, Enbridge, Brookfield Asset Management, Moderna and Fluor also report before the open.
Monday, November 9. Wholesale trade at 10 a.m. and New York Fed consumer expectations at 11 a.m. Treasury auctions include 13-week and 26-week bills at 11:30 a.m., then a $58 billion 3-year note and a 6-week bill at 1 p.m. Goolsbee speaks at 10 a.m.
Tuesday, November 10, 8:30 a.m. October consumer inflation. September prices rose 0.6% over the month and 3.7% over the year. The $42 billion 10-year Treasury auction follows at 1 p.m. Waller speaks at 4 a.m.; Bowman has outlook appearances at 3:30 p.m. and 6:30 p.m.
The Nasdaq's correction is a serious reset. Today's company reports also show why the next stage of the AI story depends on details: Cloudflare's growth and margins, Airbnb's service costs, Axon's contract timing, and AppLovin's advertising results. Friday's jobs report is the next test for the broader market.
IMPORTANT DISCLOSURES: This newsletter is for informational and educational purposes only. It is not investment, tax or legal advice, or a recommendation to buy or sell any security. Investing involves risk, including loss of principal. Company forecasts and after-hours prices can change. Consult qualified professionals about individual circumstances.
Real-time alerts on price moves, news, and trading opportunities.
Join 20,000+ investors. No spam, ever.
