Fed Holds Rates as Microsoft and Google Cloud Surge: Who Pays for AI Growth?

The Federal Reserve held its benchmark rate at 3.75%–4.00% on October 28, 2026, while central banks in Canada and New Zealand made different policy choices. U.S. stocks finished modestly higher, but the bigger test arrived after the closing bell.
Microsoft reported 48% Azure revenue growth. Alphabet reported 103% Google Cloud growth, yet quarterly capital spending exceeded operating cash flow, leaving negative free cash flow. What do those results tell us about AI demand, the cost of capital, and long-term shareholder returns?
Clear Markets connects the Fed, technology earnings, oil prices, and cross-asset signals in accessible financial English. We also explain free cash flow, remaining performance obligations, and discount rates, and preview Thursday’s U.S. GDP and inflation data.
This program is informational and educational, not personalized investment advice.
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Key Takeaways
• The Fed held its target rate at 3.75%–4.00% in a 10–2 vote, with two officials favoring a hike.
• Microsoft reported 48% Azure growth; Alphabet reported 103% Google Cloud growth.
• Alphabet’s $51.4 billion quarterly capital spending exceeded $42.3 billion in operating cash flow, resulting in negative free cash flow.
• Canada raised its policy rate to 2.5%; New Zealand held at 2.75% after a narrow 4–3 vote.
• Oil, inflation and bond yields may determine how investors value future AI cash flows.