Alphabet Search Miss, Microsoft Azure Beat and Fed’s Hawkish Pause 10/28/26

Alphabet

Across the shows: 25 speakers in other episodes, 21 bullish and 6 bearish calls, past 30 days

• Tim Seymour · Seymour Asset ManagementBearish

  Alphabet's free cash flow drop and rising spending justify the selloff; core search is under pressure.

  The quarter is about search and free cash flow, not the intrinsic value of YouTube. Free cash flow came in down about $9.1B against the Street's expectation of down about $2.7B, so spending is rising. The CFO flagged near-term margin headwinds as Google shifts to third-party cloud compute, and the 2026 capex guide was unchanged. Alphabet had already underperformed its mega-cap peers going into the print. He said the stock is far from expensive at around $290, down from over $400, but that a core business under this pressure is exactly why it should be selling off. He sees the chart retesting the March lows and says that level has to hold.

  “this is about search, this is about free cash flow. It comes in down $9,100,000,000... The Street was down 2,700,000,000 so they're spending, they're spending.”at 5:20

• Guy Adami · CNBCBearish

  Alphabet's clean search miss and weak free cash flow are a problem; the core business is decelerating.

  Search had been beating Street estimates since about March of last year, so this quarter is a clean miss. The free cash flow shortfall is a problem. Google Cloud beating expectations is a positive. The Street will focus most on whether the core business is decelerating, and Alphabet will now have to answer questions about how it will combat AI. He had expected the stock to trade well above where it did after the report. Later he said some of the concerns about Google's business being threatened by AI (he compared it to the Kodak example) are showing up in these results.

  “Search had been beating Street estimates since I think March of last year. So this is obviously a miss. Tim mentioned free cash flow, not good.”at 6:08

• Dan Nathan · RiskReversal MediaUncertain

  Alphabet's vertical integration is a real strength, but search profits funding the AI build face doubts.

  Many investors, including him, like Alphabet's vertical integration. Search defended the business until last quarter. Chrome has about 70% global browser share, and Android is a major distribution channel. Search has been funding much of the AI build. Google is also buying compute from outside its ecosystem through deals with xAI and Anthropic. Still, investors are disappointed in enterprise and consumer AI, and Alphabet's margins have declined relative to peers while it raises cash for capex. He thinks the stock trades at about 20 times forward earnings.

  “this is one where a lot of folks, including myself, they like the vertical integration here.”at 6:46

• Karen Finerman · Metropolitan Capital AdvisorsBearish

  Alphabet's search and YouTube misses are concerning; the core business matters more than capex.

  Search missed for a second straight quarter, and YouTube also worried her. The Google Cloud beat was roughly the size of the search miss, but margins were not wildly different, so the miss counts for more. She sees the narrative shifting toward capex and whether the spending expected is actually delivered. She is less worried about capex and the balance sheet than she is about Oracle. Her real concern is the underlying ad business, the 'golden goose' that generates the cash. She thinks the stock is inexpensive but calls the miss significant.

  “I think that I'm not as worried so much about the CapEx and the balance sheet in this one versus when we talk about something like Oracle. But I am worried about the underlying business that is the driver, that is the golden goose that creates all the cash.”at 10:35

• Gene Munster · Deepwater Asset ManagementBearish

  Alphabet's search deceleration will likely worsen before it improves, with AI chatbots a growing threat.

  Search grew 12% against the Street's 15%, and guidance implies further deceleration to roughly 11%. That would be three consecutive quarters of slowing. He had been negative on Google search in early 2025 because generative AI could end the ten blue links, then changed course after the March quarter when search improved. He does not think personalized bots are hurting search yet. He does see their potential as significant, since Sundar said a unified interface is coming and Zuckerberg and Musk have talked up bots as a force. The downside is that these bots could become the starting point for commerce. He calls the stock reaction warranted because the issue is anxiety that won't resolve quickly, which he thinks is negative for the stock.

  “I think it is likely gonna get worse before it gets better.”at 17:49

Microsoft

Across the shows: 24 speakers in other episodes, 21 bullish and 1 bearish calls, past 30 days

• Guy Adami · CNBCBullish

  Microsoft's 22 times multiple is not a problem, though expectations are now high.

  Investors were very pessimistic about the stock in April, when it traded around $375 and few were calling its potential. That pessimism has now been worked through. At 22 times earnings, the multiple is not a problem given what management is saying. Expectations for the stock were as bad six months ago as they are now great. He is not sure investors can get their arms around the stock at current levels.

  “multiple is not a problem 22 times given what we're hearing. I just think now as bad as expectations were six months ago, that's how great expectations are now.”at 14:26

• Dan Nathan · RiskReversal MediaBearish

  Microsoft's Copilot seat numbers could disappoint, and the stock could fall in the near future.

  Microsoft did not report Copilot seats this quarter after disclosing them for three quarters, and he thinks that number will matter. The stock was trading near 52-week highs. Most analysts have buy ratings of 90% or more on these mega caps, so sentiment is too bullish across the group. If the narrative turns against the mega caps, or if Anthropic does not go well, the stock could fall. He sees real risk in the guidance and in how investors are reacting.

  “I would not be surprised if we don't see a disappointment on those copilot numbers, and you'll see Microsoft down at some point in the not so distant future.”at 16:29

• Tim Seymour · Seymour Asset ManagementBullish

  Microsoft's Azure beat was far better than expected, so its core business looks sounder than Google's.

  Microsoft's sales were weak, with 19% year-over-year revenue growth. But Azure was significantly better than expected, and better even than the whisper number. The question is who has fundamental risk to the core business, and he feels better about Microsoft's core business than Google's. He thinks the report also reflects on Apple. The two stocks that once traded as one trade now look very different.

  “Azure was significantly better and significantly better than even a whisper that was better... I feel better about Microsoft's core business.”at 16:57

• Gene Munster · Deepwater Asset ManagementBearish

  Microsoft's 17% software growth is remarkable but not sustainable; it is not out of the woods.

  Microsoft's software business grew 14% in the June quarter and 17% in the just-reported September quarter, which Munster calls remarkable given that knowledge workers are 'on trial' from AI. Microsoft is offering voluntary early retirement to about a quarter of its workforce, which he reads as management seeing fewer seats needed for knowledge work. He concludes the growth is bucking the trend but does not believe it is sustainable and sees no evidence on the call that Microsoft is out of the woods.

  “I don't know if that's sustainable. I do not believe it's sustainable. I do not believe that they're out of the woods.”at 48:59

• Tim Seymour · Seymour Asset ManagementBullish

  Microsoft outperformed the software ETF and its multiple is safer than peers'; he sees it as ownable.

  Microsoft has outperformed the IGV software ETF, which Seymour takes as a sign its multiple is safer than the scary multiples discussed earlier that night. He also says growth is interesting even relative to Microsoft's own history, and that it beat expectations. He concludes that investors can own it at this level.

  “Microsoft has even outperformed that IGV. So I think it's a safer place on multiple. It's not a multiple that's scary like some of ones we've even talked about tonight... I think you can own it here.”at 49:26

ServiceNow

Across the shows: 4 speakers in other episodes, 5 bullish and 0 bearish calls, past 30 days

• Tim Seymour · Seymour Asset ManagementBearish

  ServiceNow's valuation is demanding and its growth does not support it.

  ServiceNow missed its next-quarter guide, with growth expected at 18% versus 19%. The software trade's valuation is the troubling part. Security names like CrowdStrike, Palo Alto and Palantir can sustain high multiples because of their customer base. ServiceNow's growth does not support its multiple, and the stock is demanding.

  “But bring it back to the valuation. And this is what to me is the troubling part of the software trade... But a ServiceNow with that kind of growth, how do you support that? ... But this one is demanding.”at 30:13

• Guy Adami · CNBCBearish

  ServiceNow's growth does not support its valuation, and it has no real valuation moat.

  The growth does not support ServiceNow's valuation, and the services side is weak. The stock has rallied about 55% off its lows and is now approaching levels seen earlier this year. There is no real valuation moat, especially given investors' concerns about the software trade.

  “and I just don't think that growth supports it... Rallied 55% off the lows. And now we're going to start to approach levels that we saw earlier this year. And there's no real valuation moat either.”at 30:43

FedEx

• Guy Adami · CNBCNeutral

  FedEx's quarter was fine but not extraordinary; the stock is good enough to hold at this level.

  The stock has rallied into a valuation that he thinks it probably deserved a couple of years ago. Given the run and the after-hours move, investors may consider trimming. He sees nothing not to like in the quarter, though it was not extraordinary. He thinks the stock is good enough to hang around at this price level. He also questions whether FedEx can pass along its higher diesel costs.

  “I don't think there's anything not to like here. Thought it was fine. I don't think it was extraordinary. But I think it's good enough to hang around this price level we're seeing right now.”at 32:24

• Tim Seymour · Seymour Asset ManagementBearish

  FedEx margins are unlikely to improve in the short to medium term, and the stock looks challenged.

  The transports as a group have underperformed. There is a bear cross and other technical signals that don't add up. He finds it hard to believe FedEx's margins will improve in the short to medium term. The stock has rallied but still looks challenged on the charts, and it is expensive on a relative basis against UPS.

  “the transports as a group, first of all, have been really underperforming... It's hard to believe that FedEx margins in the short to medium term get better.”at 32:38

Chipotle Mexican Grill

Across the shows: 4 speakers in other episodes, 1 bullish and 3 bearish calls, past 30 days

• Guy Adami · CNBCBullish

  Chipotle's comps beat expectations and the stock may rally further, though it is not out of the woods.

  Adami attributes the share gain to a relief rally on same-store sales of 2.1%, which beat expectations. The stock traded down to its June low and seemed to hold there. He says the company is not out of the woods on macro pressures, but the comp beat and reaffirmed guidance may be enough to produce more upside in the stock.

  “It's a relief rally off the comps, which at 2.1% were better than expected. We traded down to the June low, seemingly held. They're not out of the woods, but it might be enough to get a little more of a rally in CMG.”at 45:12

• Tim Seymour · Seymour Asset ManagementBullish

  Chipotle has been more resilient than peers, valuation is reasonable, and the chart is bottoming.

  Seymour says the company's management has been transparent about the consumer and the macro backdrop, and Chipotle has been more resilient than its restaurant peers. He argues valuation is not that difficult, and the stock chart has started to find a bottoming range, which he finds interesting.

  “We know their consumer and what's been going on and they actually have been a lot more resilient than the peers... Valuation, not that difficult here.”at 45:33

Amazon.com

Across the shows: 20 speakers in other episodes, 16 bullish and 4 bearish calls, past 30 days

• Gene Munster · Deepwater Asset ManagementBearish

  Amazon must navigate AI assistants that could absorb its one-stop shopping value proposition.

  If personalized bots become the starting point for shopping, Amazon's main value proposition, finding everything under one roof, could move into the bot. Amazon will have to navigate that shift. This is a mechanism-based risk rather than a call on near-term results.

  “Amazon's going to have to navigate it if in fact, the personalized bot becomes your starting point, then one of the value props of Amazon being able to find everything you want under one roof becomes everything you want within your bot.”at 21:07

Meta Platforms

Across the shows: 61 speakers in other episodes, 48 bullish and 33 bearish calls, past 30 days

• Karen Finerman · Metropolitan Capital AdvisorsBullish

  Meta's quarter was extraordinary, with ad pricing super strong.

  Meta's quarter was extraordinary, and its ad business was very good. Ad pricing was super strong, which she expects to show up in the ad market. She sets this against Alphabet, whose search miss surprised her given how well Meta's ad business was doing. The Muse AI app was not what drove her view.

  “Forget about Muse. Just the quarter itself, I thought was extraordinary. Their ad pricing was super strong.”at 24:25

United Parcel Service

Across the shows: 2 speakers in other episodes, 2 bullish and 0 bearish calls, past 30 days

• Tim Seymour · Seymour Asset ManagementBullish

  UPS is the more interesting of the two parcel stocks, since FedEx is expensive on a relative basis.

  FedEx is expensive on a relative pair basis against UPS. He says UPS is the more interesting trade if you are going to own one of the two. This is a comparison of relative value, not an absolute call on UPS. He is skeptical of the transports overall, but he sees UPS as the better way to play the group.

  “expensive on a relative pair basis. We talked about this briefly to its UPS pair, which I think is a more interesting trade if you're going to own one of the two.”at 33:05

iShares 20+ Year Treasury Bond ETF

Across the shows: 6 speakers in other episodes, 3 bullish and 2 bearish calls, past 30 days

• Guy Adami · CNBCBullish

  TLT could rise toward 84.5 near term, though a renewed rise in rates would hurt.

  Adami sees the most interesting element of the Fed meeting as the implication that rate hikes may be over. He says the 10-year yield, around 4.80%, could then stop and perhaps reverse higher. He thinks TLT could climb a little toward 84.5 over the next week or so, but warns that if rates start to reaccelerate higher it could be problematic.

  “I thought the TLT could get a little higher, 84.5, which sort of coincided to four eighty ish in the '10. But now let's see what happens over the next week or so. Because if rates start to reaccelerate higher, that could be problematic.”at 40:06

Consumer AI products

• Gene Munster · Deepwater Asset Management

  Personalized AI bots could become the starting point of commerce, reshaping Google's position.

  Sundar said Google will soon unveil a unified interface with more personalized bots. Zuckerberg and Musk have also talked about these bots becoming a force. If they become the starting point for commerce for many people, that would affect Google's position. He does not think bots are hurting search yet, and he is unsure how Google will turn search traffic into a bot experience. But the potential is significant.

  “If that's the case, if these personalized bots, that will become, for a lot of people, the starting point of commerce, which impacts where Google is.”at 19:08

• Dan Nathan · RiskReversal Media

  Meta's Muse AI app is not what drives Meta's stock, at least in the near term.

  Meta has been in the penalty box for about a year and a half. The stock's rally failed after the Muse launch, which he takes as a sign that Muse is not the driver, at least not in the near term. He also says most young people don't even know Muse exists, since it has roughly 10 million users.

  “I actually think the failure of the rally post Muse, it kind of shows you that that might not be the driver, at least not in the near term.”at 24:38

US growth & recession risk

• Scott Bessent · U.S. Department of the Treasury

  Bessent expects a strong third-quarter GDP print as the Fed signals an accelerating economy.

  Bessent says the Fed's statement seems to insinuate that policymakers believe the economy is accelerating. He has not yet seen the data, but expects a strong GDP number for the third quarter. The argument rests on the Fed's wording rather than on hard data.

  “They seem to insinuate that they believe that the economy is accelerating. I think we're gonna get... a strong GDP number for the third quarter.”at 41:33

• Guy Adami · CNBC

  Strong GDP depends on AI spending, a risk to growth that matters more for 2027.

  Adami argues that a strong GDP number is predicated on AI spending, and that the market is now questioning exactly that spending. Because the GDP outlook depends on the things the market is worried about, he sees this as a greater concern probably for 2027, and possibly 2028. He cites Alphabet, Meta and Oracle signaling significant spending increases into 2027.

  “Strong GDP number though is predicated on the AI spend, right?... we've to be concerned that GDP is all sort of predicated on exactly the things that are seemingly concerning the market right now. And I think that's a greater concern probably for 2027”at 41:52

Software & SaaS

• Dan Nathan · RiskReversal Media

  Software names like ServiceNow and Workday may be the beginning of the end after the selloff.

  ServiceNow and Workday are at the center of the software selloff. Remaining performance obligations, a proxy for backlog, look disappointing, and investors have been selling software for about a year and a half. Some models were more defensive than they should have been, so there was a baby-with-bathwater reaction. But for some of these names, this may be the beginning of the end. He says he does not have a strong view.

  “Yes, there was a bit of a baby with the bathwater. Yes, there were some models that were a bit more defensive. But this might, for some of these names, kind of be the beginning of the end.”at 29:34

US rates & the Fed

• Tim Seymour · Seymour Asset Management

  The Fed's hold was a hawkish pause: it upgraded the economy and called inflation too high.

  Seymour says the Fed's statement seemed to upgrade the economy and talked about inflation being too high, with reference to Americans who have dealt with inflation for more than six years. That combination is why he calls the pause hawkish, and he concludes the Fed is leaning hawkish.

  “I do think it was a hawkish pause... They seemingly upgraded the economy. They talked about inflation being too high.”at 40:53

US consumer

• Dan Nathan · RiskReversal Media

  Lower-income consumers are strained by cumulative inflation, a K-shaped economy with weak lower-end spending.

  Nathan says GDP growth is coming largely from AI spending, and that the lower end of the K-shaped economy is dealing with the accumulated effects of inflation. He notes that Bessent and Powell have made similar points. He concludes there is a real problem for lower-income households even as the upper end benefits from AI-driven growth.

  “then you gotta get back to the K and the lower end of the K is dealing with the accumulative effects of inflation.”at 42:39

Oil & fuels

• Dan Nathan · RiskReversal Media

  Oil and diesel prices are heading higher, with Ukraine refinery strikes adding to supply risk.

  Nathan says the White House is signaling that oil and diesel are going higher right now. He links this to a possible restart of the war and to Ukraine bombing Russian refineries. He sees this unfolding between now and year-end and says he does not know what it does for inflation expectations or spending for citizens already struggling.

  “And the White House is telling us that oil is going higher. They're saying it right now. That diesel is going higher.”at 43:11