The aBP Weekly: Wall Street Questions the AI Spending Boom as Oil Surges
Summary
Wall Street delivered another mixed week as investors questioned the returns on AI spending. The Nasdaq Composite declined 0.7% and the S&P 500 fell 0.5%, while the Dow Jones Industrial Average gained 0.4% and the Russell 2000 advanced 2.0%.
Meta's results highlighted the growing cost of the AI investment cycle. Revenue increased 26% YoY to $64.60 Bn, but quarterly capital expenditure reached $34.91 Bn. The company expects to spend between $135 Bn and $145 Bn on capital expenditure during 2026.
Oil prices surged as geopolitical risks intensified. Brent crude climbed above $117 per barrel on Friday amid renewed concerns about disruptions to Middle Eastern energy supplies, creating additional uncertainty around inflation.
Treasury yields eased over the week, but borrowing costs remain elevated. The 10 year U.S. Treasury yield finished Friday near 5%, while investors prepared for the Federal Reserve's October 27–28 meeting and another important round of technology earnings.
