Editor’s Note
The period opened with oil and bond yields pushing borrowing costs higher. A weak jobs report then cut traders’ bets on an October rate hike. Meanwhile, AI spending kept expanding, and Micron’s results showed strong demand for memory, but the scale of planned investment and reliance on a small number of customers remain open questions.
AI Spending Is Growing Faster Than the Answers
Goldman estimates cited in a post put 2027 hyperscaler spending at $1.89 trillion, up 66% since the start of 2026. The estimates for Alphabet rose from $253 billion to $507 billion, Amazon from $301 billion to $505 billion, and Microsoft from $227 billion to $373 billion. Meta was listed at $333 billion and Oracle at $174 billion.
Those are estimates, not completed spending. But they sit alongside large financing plans and commitments. One account said Amazon expects around $220 billion in capital spending this year, much of it tied to AWS and AI infrastructure. The same account described exploratory talks to transfer about $8 billion of installed Nvidia chips to an investor-owned vehicle and lease them back.
Anthropic’s reported 2025 figures show what this buildout can cost. Reuters’s review of an early prospectus put revenue at nearly $4.6 billion, up from roughly $400 million in 2024, and operating losses at $8.06 billion. Compute and infrastructure cost $7.33 billion of its $12.65 billion in operating expenses. Its reported $42 billion net loss included a $34 billion accounting charge tied to financing that could become shares.
The reported revenue growth is substantial, but costs were higher still. The same brief said almost a quarter of Anthropic’s revenue came from two customers, and many large customers had no long-term commitments. Steve Eisman separately said five customers made up 70% of Nvidia’s accounts receivable at the end of July, and that Anthropic and OpenAI generated 70% of hyperscalers’ AI revenue. Those figures make customer concentration part of the spending question: building capacity is one thing; keeping enough customers paying for it is another.
Micron Shows Strong Demand, With Supply Still Catching Up
Micron’s quarter offered a clear measure of current demand. Revenue reached $54.23 billion, compared with estimates of $50.9 billion in one brief, and adjusted earnings per share were $33.42, versus $31.49 estimated. Gross margin was 87.0%, against an 86.3% estimate.
For the next quarter, Micron guided to $60 billion to $63 billion in revenue and adjusted earnings per share of $37.15 to $39.15. Management expects fiscal 2027 to be another record year, with revenue rising each quarter, and says memory and storage supply and demand will be “much tighter” in fiscal 2027 and 2028 than in 2026.
Customer commitments add weight to that outlook. Micron has 26 strategic customer agreements covering an estimated 35%+ of revenue through 2030, with financial commitments reaching $32 billion. But the supplied material also says much of its $40 billion+ in capital spending is going into buildings and cleanrooms, while new supply will take years to arrive. Micron’s strong results show demand today; they do not settle how long tight supply will last. One risk-watch post described memory as a recurring cycle of shortage, profit, added capacity and glut.
Jobs Shifted the Rate Debate, but Oil Still Matters
The clearest change in the rate story came with September hiring. Employers added 29,000 jobs, versus about 90,000 expected, and July and August were revised down by roughly 60,000. Unemployment rose to 4.2% from 4.1%. Futures then put the chance of an October rate hike at roughly 20% to 23%, down from about 64% to 70% a week earlier.
That shift came after a stretch of high yields and rising oil. The 10-year Treasury yield reached 5.289% on September 29, its highest since June 2007. Reports later gave different levels for the yield, so there is no single settled figure in the material. Brent moved above $108 earlier in the period and was near $102 by October 1. The jobs report eased immediate rate-hike bets, but the supplied market digest still identified another oil rise as a path back to higher yields.
Inflation readings were mixed too. August headline PCE was reported at 3.4%, below the 3.7% expected, and core PCE at 3%. September private hiring was 90,000, above the 68,000 estimate, while second-quarter GDP was revised up to 2.2% from 1.5%. The next major inflation report is due October 14.
Counter-Thesis and Risk Watch
The speaker at @clearvaluetax9382 said September’s jobs figure may later be revised into a loss, while acknowledging it could be revised either way. The same speaker estimated inflation was closer to 6% than the cited government figure of 3.4%. These are the speaker’s claims.
A value-investing speaker warned that picking lasting AI winners is difficult, citing a 76% Nasdaq fall after the dotcom bubble and saying the index was still down 70% nine years later. A separate Micron post described the memory business as a cycle of shortage, profit, added capacity and glut. Those concerns point to two unresolved risks in the period’s AI story: whether customers will support the spending, and whether today’s demand will persist as new capacity arrives.
Looking Ahead
Can AI customers support the planned spending if revenue remains concentrated? And will the next inflation report or another rise in oil change the rate outlook again?