Analyst Weekly, October 26, 2026
This earnings season, beating expectations may only get companies halfway there. Investors also want to know how much cash those profits leave behind.
AI’s bill is arriving
Alphabet, Microsoft and Amazon are expected to deliver double-digit revenue growth. But their spending plans could matter more than their sales figures.
Meta provided the warning: its shares fell 6.1% after earnings as larger spending commitments overshadowed encouraging results. Investors want clearer evidence that today’s infrastructure spending can become tomorrow’s profits.
The crucial question: can AI revenue grow fast enough to justify the bill?
Follow the cash
Earnings measure profitability. Free cash flow shows what remains after operating expenses and capital investment. This metric is crucial when companies are pouring money into chips and data centres.
Some analysts project that combined trailing annual free cash flow for Alphabet, Meta, Microsoft, Amazon and Oracle will turn negative by December 2026. That is a group forecast; it does not mean every company is already cash-flow negative.
Meanwhile, a data-centre securitisation spread index reached 2.34%, highlighting lenders’ growing concerns. Greater dependence on borrowing makes financing costs harder to ignore. Watch cash-flow forecasts, funding needs and spending guidance alongside earnings beats.
Cheaper shares, higher expectations
The Magnificent Seven trades below 24x estimated earnings, compared with a ten-year average near 29, according to data from Bloomberg.
Sounds tempting. But analysts expect 27% earnings growth in 2027, up from less than 19% two months earlier. Expectations have climbed while valuations have fallen.
A lower multiple offers limited protection if the earnings underneath it disappoints.
Look beyond the usual names
The Magnificent Seven generates just under 20% of total US corporate profits. Outside that group, profits are still growing approximately 15%.
Healthcare offers examples of broader leadership. Eli Lilly reached a fresh high, Amgen showed strength against the market, and Pfizer was breaking out of a year-long trading base.
Consumer names are stirring too: Disney reached three-month price and relative highs, while Airbnb, Hilton and Marriott stood out within discretionary spending. These improving share-price trends warrant attention, although earnings must support the recovery.
What it means for portfolios
Retain selective equity exposure, prioritising strong balance sheets, dependable cash generation and reasonable valuations. Healthcare, selected financials and staples offer diversification beyond AI. Around 78% of financial stocks were in uptrends, supporting that broader opportunity.
Bonds deserve attention too. The supplied outlook forecasts the ten-year Treasury yield at 4.75% by year-end and 4.50% in early 2027, which would support bond prices. Inflation and deficits remain risks.
For AI shares, improving free-cash-flow forecasts would strengthen confidence. Further downgrades would make buying the dip harder to justify. Before adding another technology position, check whether existing funds already own the same companies.
Super Bowl of Wall Street: Big Tech Has to Deliver
This week is the Super Bowl of Wall Street. Alphabet, Amazon and Microsoft are reporting their quarterly results. Together, they account for around 11% of the S&P 500, meaning their results could determine the short-term direction of the broader stock market.
AI Arms Race
Alphabet and Microsoft will report their quarterly results on Wednesday, followed by Amazon on Thursday – all after the close of US trading. Even slight disappointments or cautious comments from the CEOs about the macroeconomic environment could trigger a chain reaction in the S&P 500 and the tech-heavy Nasdaq. Rising bond yields and oil prices are increasing financing and valuation pressure.
Investors are paying particular attention to the development of capital expenditure and the monetisation of AI. For Microsoft, the key question is how much AI is contributing to Azure growth and whether Copilot adoption is increasing. For Alphabet, the focus is on whether AI Overviews can boost advertising revenue without weighing on margins through higher computing costs. For Amazon, investors should watch whether AI applications accelerate AWS growth and improve cloud margins.
Alphabet in a Bear Market: Bottoming Out or Further Sell-Off?
The stock is 21% below its record high and has officially entered a bear market. Last week, it fell 5.9% to $317. It is now approaching an important support level, with the July low just below at $315. If this level fails to hold, the stock could fall towards the March low at $270. A return above the closely spaced 50-week and 20-week moving averages at $333 and $344 respectively would stabilise the chart. However, the most important signal for a potential reversal would be a breakout above the resistance at $355.
Alphabet, weekly chart. Source: etoro
Microsoft Holding Up – But Resistance Remains
The stock is moving within a broad sideways range and closed last week 0.9% lower at $524. This price level was first reached in July 2025. Most recently, the stock once again approached its record high of $561. A similar attempt took place in October 2025, before the stock turned lower and fell to $349 by June. The market found support above the key level of $343. In the short term, the chart would only deteriorate if the low at $486 were broken. As long as this level holds, another attempt to reach the record high remains possible.
Microsoft, weekly chart. Source: etoro
Amazon Under Pressure – The $244 Level Is Crucial
The stock closed last week 0.9% lower at $248. The September low at $244 held once again. The stock has been moving sideways for several weeks. If it stabilises and returns above the 20-week moving average at $252, the chances of an attempt to reach the record high at $287 would improve. If support at $244 breaks, the 50-week moving average at $241 would be the next level to watch. Below that, the next support would not emerge until around $224. The technical picture therefore remains tense.
Amazon, weekly chart. Source: etoro
Bitcoin holds support, but a recovery remains unconfirmed
Bitcoin is trading around $80,500 after retreating from close to $85,000. The picture combines a positive week for ETF flows with a weak finish and a partial reduction in leverage.
The levels shaping the outlook
The $79,200–80,000 zone is the immediate reference. A sustained break below it would increase the risk of a move towards $77,600–78,000, followed by approximately $76,600, where the 50-week moving average stands. STH price is closet o $75,000.
On the upside, reclaiming $81,500–83,000 would ease pressure. The $84,900–87,500 range remains the main hurdle to a more convincing recovery. These levels are monitoring references and do not guarantee a price reaction.
ETFs and derivatives send different signals
Bitcoin ETFs recorded weekly inflows of approximately $301 million, although the final two sessions saw combined outflows of nearly $774 million. That reversal weakens the otherwise positive weekly balance.
BTC open interest fell approximately 3%, with moderate funding rates. This points to a partial reduction in leverage but does not establish that the adjustment is over. The options max pain level at $78,000 should not be interpreted as a price target either.
Ethereum remains relatively weaker
ETH ETFs ended the week with outflows of approximately $221 million. Token withdrawals from exchanges can reflect staking, custody changes or internal transfers and do not, on their own, constitute a bullish signal.
With Ethereum near $2,350, $2,300–2,330 is a nearby reference zone. Reclaiming $2,500, alongside a sustained improvement in flows, would strengthen the outlook. The accumulated decline does not establish that the asset is undervalued.
Implications for risk management
The backdrop calls for distinguishing between maintaining long-term exposure and increasing it during a correction. Staggered entries reduce concentration at a single entry price, although they do not prevent losses. Leverage and positions in less liquid tokens can amplify the impact of a break below support.
The available evidence points to a fragile structure, still within the recent trading range. A sustained recovery of key levels and stabilising flows would provide stronger support than an isolated bounce.
