Alphabet beats Q3 expectations as AI fuels ad and cloud growth, raises capex guidance

South Africa

South African equities advanced as the Top 40 rose 0.61% to 103,062.8 points and the All Share gained 0.50% to 110,371.3 points. President Cyril Ramaphosa expressed optimism over ongoing US trade talks during a visit to Switzerland, though no timeline was set. Negotiations aim to ease tariffs imposed by President Trump in August, which threaten jobs in automotive and citrus exports. M3 money supply eased to 6.07% year-on-year, while credit growth rose to 6.03%. Markets now await producer inflation, budget balance, and trade data for macroeconomic direction.

European Union

European markets were mixed, with the STOXX 600 down 0.1% after touching a record high as investors awaited the US Fed decision. Gains in banking stocks, led by Santander (+4.3%) and Deutsche Bank (+5%), offset weakness in consumer discretionary shares after Adidas fell 10.4% on weaker US sales. GSK rose 6.6% after raising 2025 guidance, while Temenos and Next rallied following upbeat forecasts. Despite tariff concerns, particularly for Adidas, regional bourses including the FTSE 100 and IBEX 35 reached record highs, reflecting solid corporate resilience across Europe.

United States

US markets were mixed following the Federal Reserve’s 25 bps rate cut to 3.75–4.00%, while Chair Jerome Powell cautioned that further easing in December was not guaranteed. The Nasdaq hit a record high, driven by Nvidia’s US$5 trillion valuation milestone. Strong Q3 earnings persisted, with over 84% of S&P 500 companies beating estimates. However, Meta’s one-off US$16 billion charge weighed on tech sentiment, while Microsoft and Alphabet reported robust AI-driven growth despite rising capital expenditure. Traders reduced odds of a December cut to 71%, reflecting uncertainty around the Fed’s trajectory.

Asia

Asian equities strengthened after the Fed’s rate cut and renewed optimism over US–China trade discussions. Japan’s Nikkei gained as the Bank of Japan held rates at 0.5%, with a 7–2 vote amid persistent inflation above target. The yen weakened following the decision. South Korean stocks rallied as Washington and Seoul finalised a deal lowering US tariffs in exchange for Seoul’s US$350 billion investment commitment, boosting Hyundai (+12%) and Kia (+9%). Broader Asian sentiment improved as regional leaders signalled progress toward easing trade tensions and stimulating cross-border investment flows.

Currencies

The rand strengthened ahead of the Fed’s decision and positive trade sentiment between Washington and Beijing. The dollar held firm, while the yen weakened after the Bank of Japan maintained its 0.5% policy rate. Investors interpreted the decision as a cautious step, with only two board members voting for a hike. The BOJ reiterated its intention to raise rates gradually, contingent on economic alignment with projections. Broader currency markets reflected stabilising risk appetite, with traders scaling back bets on another US rate cut and favouring emerging market carry trades.

Commodities

Commodity markets steadied as investors awaited developments from the US–China trade talks in Busan. Gold edged higher amid a softer dollar, while oil prices held earlier gains, supported by expectations of a tariff rollback and potential demand recovery. Crude inventories declined by 6.86 million barrels to 416 million, far exceeding forecasts. Market optimism grew as President Trump hinted at reducing tariffs on Chinese goods in exchange for curbing precursor chemical exports. The outcome of the meeting between Trump and Xi Jinping remains pivotal for the near-term global commodities outlook.

Astral Foods Limited (ARL) -0.70%

Astral Foods issued a voluntary trading statement indicating a robust recovery for FY2025, with earnings per share expected to rise between 7% and 17% to 2,096–2,291 cents, and headline earnings per share up 5%–15% to 2,016–2,208 cents. The improvement was driven by stronger second-half performance, supported by higher broiler slaughter volumes, improved poultry sales and pricing, and better cost efficiencies. Feed sales—both internal and external—also grew, aided by effective raw material procurement in volatile markets. Enhanced poultry farming metrics lowered feeding costs, while continued execution of the Group’s best cost strategy supported profitability. Astral successfully rebuilt its balance sheet, achieving a surplus cash position, with FY2025 results due on SENS by 17 November 2025.

Glencore plc (GLN) +5.56%

Glencore reported a strong third-quarter 2025 production performance, maintaining full-year guidance with tighter ranges. Copper output rose 36% quarter-on-quarter, led by significant recoveries at KCC, Mutanda, Antamina, and Antapaccay, while zinc volumes climbed 10% year-to-date and coal output remained robust. Year-to-date, copper production fell 17% due to planned mine sequencing, but higher grades and recoveries drove a Q3 rebound. Cobalt production rose 8%, zinc gained 10%, and steelmaking coal surged 123% year-on-year following the EVR acquisition. Ferrochrome volumes halved amid smelter suspensions. Marketing Adjusted EBIT is expected around the midpoint of the upgraded US$2.3–3.5 billion range, reflecting solid trading conditions and strong operational execution across key commodities.

Microsoft Corporation (MSFT) -0.10%

Microsoft reported record quarterly capital expenditure of nearly US$35 billion as it accelerates AI and cloud infrastructure investment, reversing earlier guidance of moderation. While shares fell 4% on cost concerns, revenue rose 18% to US$77.7 billion and profit of US$3.72 per share exceeded forecasts. Azure revenue surged 40%, outpacing expectations, though capacity constraints persist. The company reaffirmed guidance of US$79.5–80.6 billion for the current quarter. Its US$135 billion OpenAI partnership underpins Azure’s growth, helping Microsoft challenge Amazon’s cloud dominance despite rising scrutiny over escalating AI-related expenditure.

Alphabet Inc. (GOOGL) +2.65%

Alphabet delivered stronger-than-expected Q3 results as AI-driven demand boosted both its core advertising and cloud divisions. Revenue rose 12% year-on-year to US$102.35 billion, above forecasts, with adjusted EPS of US$3.10 versus US$2.26 expected. Google Cloud revenue surged 34% to US$15.16 billion, supported by enterprise uptake of AI infrastructure and services, lifting its sales backlog to US$155 billion. Advertising revenue climbed 12.6% to US$74.18 billion, easing investor concerns over AI disruption. Capital expenditure guidance was raised sharply to US$91–93 billion, underscoring Alphabet’s aggressive investment strategy amid intensifying competition from Microsoft, Amazon, and OpenAI’s newly launched Atlas browser.

Meta Platforms Inc. (META) +0.03%

Meta reported 26% year-on-year revenue growth in Q3 2025, surpassing expectations, but a 32% rise in expenses and a US$16 billion one-off charge hit profits, driving shares down 8% post-results. Excluding the charge, adjusted net income reached US$18.64 billion. The company raised 2025 capital expenditure guidance to US$70–72 billion and forecast “notably larger” spending next year to accelerate AI infrastructure and data-centre expansion under its new Superintelligence Labs unit. Despite margin pressure, Meta’s 3.5 billion-user base, enhanced AI-driven ad platform, and growing Reels and WhatsApp monetisation underpin continued revenue momentum amid intensifying AI investment competition.

Starbucks Corporation (SBUX) -1.47%

Starbucks posted its first rise in comparable sales in nearly 18 months, supported by a 3% increase in international markets, though U.S. growth remained flat as budget-conscious consumers cut back. Earnings of US$0.52 per share missed expectations, and margins narrowed sharply to 2.9% from 14.4% a year earlier, pressured by surging arabica coffee prices, tariffs, and restructuring costs. CEO Brian Niccol’s “Back to Starbucks” turnaround continues, with over 600 underperforming store closures and operational simplification efforts underway. Despite near-term cost headwinds, management anticipates gradual recovery momentum, supported by brand resets, labour investments, and stabilising sales in China.

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