Wall Street will spend Wednesday waiting on two things: a Federal Reserve rate decision this afternoon and Apple's fiscal third-quarter earnings after the close, the last time Tim Cook will host the call as chief executive. Both arrive with the year's dominant trade — the buildout of artificial-intelligence infrastructure — showing its first serious cracks.
Apple this month became the first company to touch a $5 trillion market capitalization, surpassing Nvidia as the world's most valuable business, CNBC reported. The stock is up 25 percent this year, topping its megacap peers. Cook, who steps down Sept. 1 to become executive chairman, hands the operating job to John Ternus, a 25-year Apple veteran and head of hardware. Ternus will inherit a memory-chip crunch, a delayed Siri redesign, and a widening question about whether Apple's roughly $11 billion annual capital-spending budget can hold in a market whose leaders are pushing past $200 billion.
AI trade rolls over
The setup follows a week in which investors punished hyperscalers for raising the price of AI. Alphabet lifted its 2026 capex target to as much as $205 billion on its second-quarter call, posted its first negative free-cash-flow quarter in more than a decade, and watched its stock fall 7 percent the next day. Amazon, Meta, and Microsoft — all reporting this week — dropped in sympathy. Mark Mahaney of Evercore ISI wrote that Alphabet's move "increases the odds of similar behavior" from Amazon and Microsoft. Analysts polled by Visible Alpha expect Microsoft to guide to $190.1 billion and Amazon to lift its 2026 forecast toward $207.4 billion. Amazon's long-term debt jumped 81 percent to $119 billion between December and March; Alphabet's rose 111 percent to $98 billion in the first half.
Profit-taking in the winners
The pullback has been sharpest in memory. Western Digital closed at an all-time high of $746 on June 18, up 333 percent for the year; it now trades nearly 40 percent below that peak. Micron, Seagate, and Sandisk have followed. Money has rotated into laggards: ServiceNow is up about 11 percent month-to-date and Salesforce roughly 16 percent, while Costco, Walmart, and Johnson & Johnson — which touched an intraday record Tuesday — have caught bids. "You can call it a broadening," Jim Cramer, host of CNBC's "Mad Money," told viewers Tuesday. "Or you can call it fleeing." Cramer said he remains bullish on Nvidia and Intel, and added, "You have to sell the parabolic moves that these shortages trigger because they always end."
What Ternus inherits
Apple has taken a different path into AI, licensing much of its model stack from Google and running workloads on Google's cloud rather than building its own. FactSet data show Apple's June-quarter capex at $3.4 billion. In April, Apple set aside a "net cash neutral" policy in place since 2018, saying it would assess cash and debt independently. CFO Kevan Parekh told analysts, "We invest in the business first and foremost and then look to kind of return excess cash to shareholders." Under Cook, Apple has bought back more than $1 trillion in stock.
Memory prices are already reshaping product economics. Apple raised starting iPad and Mac prices by at least $100 last month, with some configurations up more than $1,000, and analysts expect iPhone increases before the fall launch. Counterpoint Research forecasts total smartphone shipments will fall nearly 14 percent this year, the steepest drop since 2013.
The bull case
Not everyone reads the tape as a top. Wedbush called Alphabet's guide evidence of a "willingness to spend" into constrained capacity, and told clients an Amazon capex boost would be "worthwhile given AWS's re-acceleration." Morgan Stanley wrote last week of "myriad price hikes likely to drive upside to revenue and EPS over the next 6-18 months" at Apple. Today's dossier draws solely on center-tier wire and financial-press reporting; the substantive disagreement is market-internal — bulls arguing durable AI demand, bears calling a top on shortage-driven profits — rather than partisan.
What's next
The Federal Open Market Committee releases its statement at 2 p.m. Eastern, followed by Chair Jerome Powell's news conference. Apple reports after the close, alongside Meta and Microsoft. Amazon follows Thursday.