The Drunken Sailors Are About to Get Their Bill

The drunken sailors are about to get their bill.

Tonight Microsoft, Meta, Amazon, and Alphabet report earnings after the close. Combined these four companies are spending $650 to $700 billion on AI infrastructure in 2026 alone. 

That is not a typo. 

That is more than the GDP of most countries being poured into data centers, chips, and AI models in a single calendar year.

Here is the part the market has been politely ignoring.

The same companies committing $650 billion to AI have laid off over 92,000 workers in 2026. Meta cut 8,000 employees and left 6,000 positions unfilled in the same week it guided $115 to $135 billion in CapEx. 

Microsoft offered buyouts to 8,750 US employees while spending $110 to $120 billion on infrastructure. Amazon already cut 30,000 jobs. Google has been running rolling cuts since 2023. Meta's free cash flow is expected to decline 83 percent year over year while the spending accelerates.

Just fire the humans, keep funding the machines, and don’t stop spending. 

What could possibly happen, right?

The options market has already told you something big is coming tonight. 

The expected move on the S&P heading into this session is $41. 

That is the options market pricing the risk it sees in this single afternoon. 

The tape has been moving almost nothing ahead of the close because the market is holding its breath. When it exhales tonight, it is going to exhale hard in one direction or the other.

Here is what is actually at stake. Forty percent of the S&P 500 is now classified as AI-related. 

That is not a balanced market. 

That is a market that has made a single enormous bet and is waiting to find out if it was right. Oil is sitting at $104 to $105 a barrel with real consequences for demand destruction and household budgets. Tech companies are laying off tens of thousands of workers who shop at Amazon and click on Meta ads. 

The market has been ignoring all of it because AI land runs on a different set of rules.

Tonight we find out if those rules hold.

The drunken sailors have been spending with absolute conviction that the returns are coming. The question tonight is not whether these companies beat EPS. They almost always beat EPS. 

The question is whether the guidance tells you the spending is producing the acceleration it promised. If Azure re-accelerates, if AWS re-accelerates, if Meta's CapEx commentary suggests the ROI is real, the drunken sailors ordered the right drink and the party continues. 

If guidance disappoints or CapEx guidance goes higher without matching revenue acceleration, the bill arrives and it is going to be a large one.

Mac and Gianni are going live at 4 pm ET today to cover every piece of it in real time. The Powell press conference and the earnings as they drop. 

If you want to understand what tonight means for your portfolio, be in the room when it happens.

Join Mac and Gianni Live at 4 PM ET

To your success,

Don Kaufman