Good Afternoon. It’s good to be a cloud services provider. Microsoft Azure grew by 40%, Google Cloud jumped 63% to pass $20 billion, and Amazon Web Services' growth sped up to 28%. The Mag 7 is meeting or exceeding expectations so far. Next up is Apple, which announces its earnings after the market closes tonight. Almost everyone expects them to beat expectations, so tomorrow's market reaction will likely be dramatic depending on whether they actually pull it off.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

1. The Split Decision — Azure +40%, Cloud +63%, AWS +28%, Meta -9% on Capex

The News: All four hyperscalers beat overnight but the action was anything but uniform. Microsoft reported Q3 revenue of $82.9B (+18%) with Azure +40% — beating Street whispers at 39.3%. Alphabet crushed with Cloud +63% past $20B, rallying 6.6% after-hours. Amazon's AWS grew 28% to $37.6B — its fastest in 15 quarters — with a $150B annualized run rate. Meta beat revenue ($56.3B, +33%) and EPS ($10.44 vs. $6.82 consensus) but got lost around 8% on a 2026 capex bump to $125–145B.

Why It Matters: For investors, the sub-text here is dispersion: the market is finally willing to discriminate between "AI pays off" (cloud reacceleration) and "AI bill you pay now" (Meta's capex). Microsoft's 40% Azure is the number that re-rates the OpenAI-adjacent trade higher; Meta's $145B high-end is the number that re-rates the "ad-monetization must fund AI" trade lower. For consumers, AWS pricing pressure is easing as capacity catches up to demand — expect cloud compute costs to stabilize through the back half.

What to Watch: Apple after the bell (Q2 FY2026, consensus $109.7B revenue / $1.95 EPS). Polymarket prices a 96% implied probability of an EPS beat. Also: whether capex commentary from Tim Cook — if shared at all — rhymes with Meta's or with Microsoft's.

Source: TheStreet

2. Q1 GDP Prints 2%, Vindicating Powell's Hold

The News: The Bureau of Economic Analysis released the advance estimate of Q1 2026 GDP at 8:30 a.m. ET, showing the U.S. economy expanded at a 2.0% annualized rate — rebounding from Q4 2025's 0.5% pace, which had been dragged down by a government shutdown. The number blew past the 0.5% Polymarket "counter-argument" and landed above the lower end of the Fed's projection band. Atlanta Fed GDPNow had its Q2 initial estimate at 3.7%.

Why It Matters: For investors, this is the macro print that validates Powell's "dissenting hold" yesterday — you don't cut rates with a 2% Q1, $116 Brent, and AI-cap-ex pouring concrete. The 10-year is confirming, holding around 4.27% and refusing to retreat. For consumers, the resilience is real but misleading: the 2% handle comes with an energy-cost passthrough still working its way into May retail prices. Hot data + hot oil = a Fed that sits on its hands all summer.

What to Watch: The BEA's PCE inflation release at 10:00 a.m. ET tomorrow (Trimmed Mean PCE also hits at 11:00 a.m.). If core PCE prints above 2.8%, the rates-higher-for-longer trade accelerates; if it prints in-line, the September-cut optionality keeps modest dispersion in the curve.

Source: CBS News

3. Mastercard Q1 Revenue +16%, Net Income +18%

The News: Mastercard reported Q1 2026 net revenue of $8.4B, up 16% year-over-year, with net income of $3.9B (+18%) and diluted EPS of $4.35 (+21%). Operating margin expanded 120 basis points to 58.4%. The company also announced it agreed to acquire crypto-payments infrastructure firm BVNK for $1.5B plus earn-out — its second stablecoin-rails play of the year. Shares rose pre-market on the news, though the travel-concerned names the company tracks still showed softening in March.

Why It Matters: For investors, Mastercard is the cleanest tell on global payments velocity — and a 16% revenue print means the consumer is still spending despite $116 Brent. The BVNK acquisition specifically positions Mastercard as the rails behind USD-stablecoin settlement, a market Bank of America now sizes at $2 trillion by 2028. For consumers, the message is that the Hormuz-driven hit Booking flagged yesterday is a travel-specific bleed, not a broader spending recession. Yet.

What to Watch: April cross-border volumes commentary on the call — Visa's call gave decent color last night but Mastercard's international book skews higher. If international softens below 15%, the travel-margin cut story gets a second leg.

Source: SEC EDGAR / Stock Titan

4. Eli Lilly +9% on Q1 — Orforglipron Oral GLP-1 Hits Its Stride

The News: Eli Lilly reported Q1 2026 earnings and held its 10:00 a.m. ET conference call. Shares skyrocketed 9.1% on the day to $928.86 — one of the best single-day moves in the large-cap pharma complex in 2026. The headline driver was the continued ramp of Zepbound/Mounjaro GLP-1s plus incremental commentary on orforglipron, the oral GLP-1 candidate that would slot into a $150B TAM without the cold-chain infrastructure of injectables. Operating margin expanded meaningfully on manufacturing scale-up.

Why It Matters: For investors, Lilly is the one mega-cap growth story that's immune to the Hormuz-oil inflation tax and the AI-capex ROI debate — a rare "cycle-proof" compounder. A 9% single-session gain at a $800B+ market cap is roughly $75B of wealth created in one session. For consumers, the oral-GLP-1 arrival (expected 2H 2026 approval) will finally break the injection barrier, pulling in 30–40% of the addressable population that refuses needles.

What to Watch: FDA guidance on the orforglipron approval timeline and any read-through on the supply chain ramp. If Lilly can scale oral production to match injectable demand, Novo Nordisk is looking at its first material share loss since Ozempic.

Source: Barchart

5. Apple Reports Tonight — $109.7B Expected, Polymarket Says 96% "Beat"

The News: Apple reports Q2 fiscal 2026 after the close at 4:30 p.m. ET with the call at 5:00 p.m. Street consensus sits at $109.69B revenue (+15%) and $1.95 EPS (+18%), with JPMorgan at a bullish $112.7B. iPhone is expected at $56.9B on the iPhone 17 upgrade cycle; Services at $30.4B on a 48–49% gross margin. Polymarket pricing implies a 96.5% probability that Apple beats the $1.94 GAAP EPS line; the Street expects a buyback re-up and a mid-single-digit dividend hike.

Why It Matters: For investors, Apple is the last of the "old Mag 7" to report and the only one without an AI capex line item big enough to scare the market. The tell tonight is whether Tim Cook — in his first call since John Ternus's succession announcement — says anything about memory costs (a headwind) or Chinese share gains (a tailwind). For consumers, a buyback re-up signals Apple thinks the stock is undervalued; a lighter-than-expected capital return suggests the company wants dry powder for something bigger.

What to Watch: Services growth rate (consensus +13–14%), Greater China commentary, and any hint at Q3 guidance given the tariff-oil overhang. If the Q3 guide goes defensive, tomorrow's tape gets ugly despite today's relief rally.

Source: AppleInsider

6. Eurozone Q1 GDP +0.1%

The News: Eurostat's preliminary flash estimate showed Eurozone Q1 2026 GDP up just 0.1% quarter-over-quarter — below the 0.2% consensus and matching Q4 2025 weakness. On a year-over-year basis, euro-area growth decelerated to 0.8% from 1.3% the prior quarter. PMIs had already signaled moderation, but the weak print complicates the ECB's May meeting as it weighs persistent inflation against faltering activity.

Why It Matters: For investors, the 2% U.S. / 0.1% Eurozone divergence is the widest transatlantic growth gap since 2023 — and it explains why the dollar is holding up even as U.S. front-end yields have drifted. For the ECB, the hawks who wanted to push back on a May cut just lost their argument. Expect a 25-bp cut at the May 8 meeting to become consensus; the spread between the 2-yr Bund and 2-yr Treasury widens from here.

What to Watch: The full Q1 GDP release on May 13 for country-level detail — Germany and France are the ones to watch, particularly on how much of the weakness is energy-driven versus auto/industrial-driven.

Source: Borsa Italiana / Il Sole 24 Ore

7. Brent at $114.66 — "Wartime High" Absorbed as Cloud Earnings Beat

The News: Brent crude traded at $114.66 per barrel at 8:30 a.m. ET today — 66 cents above yesterday and roughly $53 above where it was a year ago. The NYT headlined overnight that oil was at a "wartime high above $120" after a brief overnight spike, though the spot drifted lower on the open. WTI sat around $110 and refining crack spreads widened again as U.S. East Coast inventories showed another draw. Trump continues to say Iran negotiations need "several days."

Why It Matters: For investors, the tape absorbing $115 Brent while the S&P rallies is a quiet regime change. Markets are now treating the Hormuz premium as semi-permanent — and rotating accordingly (energy integrateds in, travel out, industrials re-rated on input costs). For consumers, U.S. EIA data implies a mid-summer gasoline peak at $5+ retail before the SPR release, if one comes, starts to feed in.

What to Watch: Any Saudi Arabia announcement of a unilateral production bump (post-UAE exit) and whether Treasury signals an SPR release to coincide with Memorial Day. Either event takes $3–5 off Brent; absent both, $120 is the next resistance.

Source: Fortune

8. BOJ Hawkish Hold Ripples Into FX

The News: The Bank of Japan's Tuesday decision to hold its policy rate at 0.75% came with a surprisingly hawkish 6–3 dissent vote (up from 8–1 in March), and that hawkishness is still feeding through the FX market today. The BOJ raised its fiscal-2026 core inflation forecast to 2.8% from 1.9% and cut growth to 0.5% from 1.0%, explicitly citing "broader pass-through effects from surging crude oil prices." USD/JPY has been volatile around 160, with intervention risk elevated; markets are now penciling a June rate hike as the base case.

Why It Matters: For global investors, a hawkish BOJ into a hot U.S. GDP print is a nightmare for long-duration Japanese equities but a floor under the yen carry trade unwinding. For JGB holders, the market is pricing the first real normalization move since 2007. For global allocators, Japan goes from "safe haven" to "hawkish stagflation" — a rotation signal the Topix is starting to reflect.

What to Watch: Dissenter Nakagawa's final June vote (her term ends June 29; successor Sato is considered dovish) — it may be the last hawkish vote for the year. Also watch USD/JPY for any break through 160 that triggers MoF intervention.

Source: Reuters

Q: Why did the espresso keep checking its watch?

A: Because it was pressed for time!

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