Martin Gamble on US markets: Google-owner Alphabet soars, Meta punished

US markets were surprisingly steady this week despite a barrage of macroeconomic news and big technology earnings.

The Federal Reserve left interest rates unchanged as expected but four of its twelve policy members dissented, revealing the biggest lack of consensus at the Fed in 34 years.

In Jerome Powell’s last meeting as chair, he told reporters he intends to stay on as a Fed governor under his successor Kevin Walsh until ‘it’s appropriate for me to leave.’

With the Strait of Hormuz remaining closed and peace talks on hold, Brent oil prices climbed back up to around $115 a barrel. Equity markets seem not to care while earnings growth from big technology companies stay strong.

Markets priced out any chance of rate cuts for the rest of 2026 and bond yields continued to drift up with the 10-year yield touching 4.4%.

Data showed the US economy grew at an annual rate of 2% in the first quarter, falling shy of the 2.3% expected by economists while the PCE (Personal Consumption Expenditures) index rose 0.7% in April, its biggest gain since 2022, and labour costs rose more than expected.

Semiconductor stocks continued to march higher on AI data centre demand with Qualcomm climbing 20% after the chipmaker said it would start shipping to a ‘large hyperscaler’ within the calendar year.

The biggest faller in the S&P 500 was chip testing equipment maker Teradyne after the company guided for lower second quarter profit. The shares are up 365% over the last year.

Apple boosted by big iPhone sales

The iPhone maker delivered revenues and earnings above analysts’ estimates in its first report since CEO Tim Cook announced he will be stepping down after 15 years at the helm.

The company projected revenue growth in a range of 14% to 17% in the June quarter compared with consensus estimates calling for 9.5% growth to $103 billion according to LSEG data.

After nearly 20 years since it first appeared the iPhone remains Apples’s best selling product, although sales fell slightly short of analysts’ forecasts in the quarter due to supply constraints.

Tim Cook commented: “The demand was off the charts. And there's just a little less flexibility in the supply chain at the moment for getting more parts.”

Apple also said it expects ‘significantly higher’ memory costs to impact the business.

In a change of policy chief financial officer Kevin Parekh said the company will no longer look to maintain a neutral net cash position, implying more flexibility on capital allocation.

The company announced a new $100 billion share buyback and a 4% increase in the dividend to $0.27.

Hyperscalers – Alphabet climbs, Meta slides

The big technology firms reported better than expected earnings across the board this week, but only Alphabet came out smelling of roses with the shares up 10% to a new all-time high of around $384.

Alphabet CEO Sundar Pichai said Google Cloud’s 63% revenue increase would have been even greater if the company were able to meet demand as ‘compute remained constrained,’ expanding the backlog to $460 billion.

This means more spending and the company upped capital expenditure guidance for 2026 by $5 billion to a range of $180 billion to $190 billion, double the prior year’s spend.

Arguably, Meta’s results were the most impressive on paper, but you would not guess it from the negative market reaction with the shares falling 9%. Sales jumped by a third to $56.3 billion with net income up 61% to $26.8 billion.

Investors were once again spooked by Meta’s spending plans which increased by $10 billion from three months ago to a projected range of $125 billion to $135 billion.

CEO Mark Zuckerberg defended the increase saying it: “reflects our expectations for higher component pricing this year and, to a lesser extent, additional data centre costs to support future year capacity”.

Microsoft received a mixed reaction despite solid earnings beat and its Azure cloud business notching up growth of 39%, ahead of its own guidance.

The company is forecasting 2026 capital expenditures of $190 billion, up 61% on the prior year and higher than analysts’ forecasts.

Amazonsaw its shares mark new all-time highs of $275 after a blow-out quarter driven by cloud revenues which increased by 28%, the fastest pace in three years.

Coca-Cola global growth beats expectations

Beverage giant Coca-Cola demonstrated its resilience after reporting a rare combination of volume growth, margin expansion and earnings upgrade, supporting a mark up in the share price this week.

Organic revenues grew 12% to $12.5 billion driven mainly by volumes with price contributing two percentage points, showing the company is not solely reliant on raising prices.

Global unit case sales rose 3%, exceeding the 1% growth analysts were forecasting with US volumes rising 4%.

The standout segment was Coke-Zero which saw volumes increasing by 13%, with the company noting a ‘significant’ uptick in demand for low and zero calorie options, partly driven by the adoption of weight loss drugs.

To address weakness in demand from lower-income consumers Coke has launched single serve mini-cans across convenience stores which generated high single digit volume growth.

Coke raised its 2026 EPS (earnings per share) growth projection to a range of 8% to 9% from 7% to 8% while maintaining organic revenue growth at 4% to 5% and free cash flow guidance of $12 .2 billion implies growth of around 7% on the prior year.