Andrew here. Keep your eyes on the news conference this afternoon from Kevin Warsh, the Fed chairman. While the central bank is expected to hold rates steady, Warsh is anticipated to maintain a firmly hawkish stance amid sticky inflation. Will he change his position?
After the closing bell, the focus will shift to Big Tech as Microsoft and Google report earnings. The critical metric isn’t top-line revenue — it’s their artificial intelligence capital spending, especially with Anthropic’s I.P.O. expected to come as soon as next month. More below.
All eyes on the hyperscalers
Tech bulls have had a lot to cheer about this week. Nasdaq Composite futures on Wednesday point to a third straight day of gains before pivotal earnings reports from artificial intelligence bellwethers, starting with Microsoft and Alphabet’s Google after the closing bell.
Investors will be focused on the returns the tech giants are getting from their soaring A.I. spending.
Elsewhere, there’s been no letup: Meta, SpaceX and Broadcom have announced deals this week to raise a total of about $200 billion to fund their A.I. aspirations, even as borrowing costs climb.
Fears of a capital bottleneck may be overblown, but other obstacles loom. SK Hynix, whose memory chips are key to A.I. infrastructure (as well as to cars, tech gadgets and more) reported blowout earnings on Wednesday and said it had effectively sold out of high-bandwidth and less-potent A.I. memory through 2029. It’s a similar story of supply crunches across the memory market.
What can investors expect from Google? In July, Google delivered a solid quarterly profit and raised its capital expenditure forecast for the year to as high as $205 billion. But its shares tumbled as it reported quarterly cash flow going negative, a rarity. That poses big questions, including:
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Will Google up its A.I. spend again?
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And what will it tell analysts about its tensor processing units, the high-powered chips that have emerged as an alternative to Nvidia’s processors. OpenAI plans to place a big order, The Information reports.
And from Microsoft? The company’s shares have rallied significantly since its last earnings call in late July. The tech giant has emerged as a major beneficiary of the A.I. industry’s spending spree. Its bottom line has surged, bolstered by robust demand for its cloud computing offerings.
Unlike other hyperscalers, Microsoft has held the line on capex spending. The company has said the spending outlay would come in at roughly $175 billion for the year. And, it announced this week that it was extending buyout offers to 60,000 employees — a quarter of its work force — to offset costs as it proceeds with its A.I. investment push.
Investors will also be watching the Fed. The central bank is widely expected to stand pat on interest rates at Wednesday’s meeting. But the futures market on Wednesday predicts a rate increase at the Fed’s next meeting in December. Watch what Kevin Warsh, the central bank’s chairman, has to say about the turbulent bond market.
The yield on the 10-year Treasury note rose to 5.01 percent on Wednesday. Some investors have grown concerned that the A.I. borrowing binge risks pushing yields up further.
HERE’S WHAT’S HAPPENING
Israel’s election is too close to call. Exit polls showed no clear winner from the vote on Tuesday, suggesting that there could be weeks of gridlock as Prime Minister Benjamin Netanyahu’s far-right governing coalition and a bloc of opposition parties led by Gadi Eisenkot vie to form a government. The Tel Aviv stock market and the shekel slumped on the news. The most likely outcome is no government formed or new elections, according to Kalshi, the prediction market, which gave a roughly 55 percent chance of “no one” becoming prime minister.
Oil prices jump again. Brent crude, the international benchmark for oil, rose to more than $115 a barrel after The Wall Street Journal reported, citing anonymous sources, that American officials had warned several Gulf countries to be prepared for short, intense attacks on Iran after U.S. midterm elections. Rising energy costs faced by American consumers come on top of the $47.1 billion the U.S. military has spent through Oct. 16 on the war, according to Pentagon data.
The future of Weil, Gotshal & Manges looks increasingly uncertain. The storied law firm has hired a bankruptcy lawyer, Brian Resnick of Davis Polk, to advise it on possible options, including winding down, after merger talks with Willkie Farr & Gallagher collapsed, The Wall Street Journal and The Financial Times report, citing unnamed sources. The turmoil at Weil deepened as two litigation partners jumped to Skadden Arps, a rival, joining other partners who had recently left for other firms; Weil’s Ramona Nee has also reportedly told the firm that she wouldn’t take the role of leading the partnership.
Scoop: Antitrust enforcers create an A.I. legal start-up
Jonathan Kanter and Doha Mekki, who led the Justice Department’s antitrust division under President Joe Biden, have founded a start-up that makes an artificial intelligence tool for litigators, Sarah Kessler is first to report.
The start-up, FluxCap, aims to speed up and improve tasks that now require an army of junior lawyers. It has raised $6.4 million in seed funding from investors including Y Combinator and Bloomberg Beta.
“We want the ability of a small group of really elite, capable, creative lawyers to work with technology like ours, to actually be able to litigate at scale,” Kanter told DealBook.
Legal tech is getting more competitive. Funding for legal start-ups grew nearly 150 percent from 2024 to 2025, to $3.2 billion, according to PitchBook. (Almost $800 million of that went to one company, Harvey.)
The A.I. giants Anthropic, Google and OpenAI have also released tools for lawyers, and some large law firms have said they will create A.I. tools built on their own expertise.
FluxCap has brought in lawyers with deep domain expertise. In addition to Mekki and Kanter, the FluxCap team includes at least four former officials from the Justice Department’s antitrust division, who helped build guidance for how A.I. agents should reason through problems.
“We’re calling it deep legal tech,” Kanter said.
The tool is intended for both private and public antitrust lawyers. The law firm Kressin Powers is one of the first customers. “Flux is built by people who ran monopolization cases and reason the same way we do,” said Brandon Kressin, who helped found a boutique law firm with Kanter. That shared expertise makes it “more valuable to us than just kind of a wrapper on Claude or something like that,” he said.
FluxCap is also in procurement talks with offices of two state attorneys general that have stepped up antitrust enforcement during the second Trump administration, and with one large municipality.
The start-up sees a future with more boutique litigation firms. Kanter said that FluxCap wasn’t retrofitted to Big Law as it exists today, but that the goal was “instead to imagine the world as it should be, and we believe it will be, and then build to that industry.”
number of the day
$40 trillion
That’s what the artificial intelligence giant Anthropic suggests is its total addressable market. It disclosed the enormous figure this week in its I.P.O. filing, surpassing the $28.5 trillion estimate SpaceX provided in its S-1 this year. Such numbers can seem fantastical at times, but start-ups commonly use the metric to give investors an idea about their growth potential. (That said, the term “total addressable market” does not appear in Anthropic’s prospectus.)
It’s traditionally calculated by multiplying potential customers by an average of how much each could spend on their products. But Anthropic went further, indicating that its market opportunity amounted to the economic value of all of the work that knowledge workers performed last year.
Inside the $333 million campaign to defeat California’s billionaire tax
Rarely has a cause brought together Silicon Valley’s tech elites like the battle to defeat California’s proposed billionaire tax.
The campaign against Proposition 40, a ballot measure that would impose a one-time 5 percent tax on the state’s wealthiest people, has produced a huge advertising blitz before the vote next week.
Some 80 donors have given more than $333 million to Building a Better California, a nonprofit organization started this year to fight Proposition 40, making it one of the best-funded political efforts in California history.
An all-star group of tech industry leaders is heading that movement, including Sergey Brin, a founder of Google; Eric Schmidt, the former Google C.E.O.; Patrick Collison, the Stripe C.E.O.; and John Doerr, a famed venture capitalist and longtime Democratic fund-raiser.
So crucial is the need, in the eyes of the billionaires, to prevent the passage of the measure, that they’ve been holding regular weekly calls to plan strategy and push for bigger donations, Theodore Schleifer and Erin Griffith reported for The Times:
The effort to fight Proposition 40 began with Mr. Brin and has swelled to include a wide cross-section of Silicon Valley power brokers. Donors have pressed business peers to consider giving to the organization and joining the Tuesday calls. Sometimes, the ask is for billionaires to consider donating a percentage of their net worth, a cheap commitment if it helps kill a 5 percent tax.
Mr. Doerr and Mr. Collison, or people who work on their political operations, have made many of the fund-raising calls. They are Building a Better California’s third and fourth largest donors, shelling out $40 million and $33 million, respectively. Each declined to comment.
In addition to buying ads against the proposed tax, Building a Better California has spent heavily to support Proposition 42, a “countermeasure” on the ballot that the group stood up to effectively ban future wealth taxes and potentially supersede Proposition 40.
THE SPEED READ
Deals
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In I.P.O. news: Jio Platforms, an Indian technology company backed by Meta, Google and billionaire Mukesh Ambani’s Reliance Industries, soared in its trading debut on Wednesday. And Syngenta, the agrochemicals group, is reportedly targeting a valuation of at least $66 billion in a planned Hong Kong listing. (NYT, Reuters)
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The Trump administration is offering Constellation Energy up to $5 billion in financing to upgrade its reactors in a bid to spur nuclear power. (Bloomberg)
Politics, policy and regulation
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Palmer Luckey, a founder of the defense technology firm Anduril Industries, said he expected no letup in U.S. military spending even if Democrats take control of Congress. (Bloomberg)
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In prediction market news: The Commodity Futures Trading Commission is reportedly investigating whether Polymarket violated a 2022 agreement to ban U.S. users from its main overseas platform. The agency is also suing Utah to stop its effort to ban Kalshi from the state. (Reuters, CoinDesk)
Best of the rest
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