Daily Market Report – January 29, 2026
Markets: AI Costs Become a Stress Test – Fed Pauses
The US Federal Reserve has kept its key interest rate unchanged at 3.50% to 3.75%, as expected. What was crucial was less the rate decision itself than the tone: the Fed sees no urgency for further cuts as long as the economy and labor market remain stable and inflation only declines slowly.
However, the reported figures from Microsoft MSFT and Meta Platforms META were decisive. Microsoft MSFT fell about 12% today. The reported numbers looked good at first glance: Revenue: $81.3 billion (+17%), operating income: $38.3 billion (+21%), net income (GAAP): $38.5 billion (+60%). However, the cloud growth (especially Azure) was not sufficient for many investors to justify the high investments. Data center and AI investments are rising sharply. This reduces free cash flows and capital returns.
Meta Platforms META rose about 10% today. Market participants are also concerned about high investments at Meta. Meta reported good numbers: Revenue: $59.893 billion (+24%), operating income: $24.745 billion (+6%), net income: $22.768 billion (+9%). The revenue outlook for the current quarter was also better than many had expected: Revenue outlook Q1 2026: $53.5–56.5 billion, Capex outlook 2026: $115–135 billion. Investors hope that rising advertising revenues will finance the rapidly growing AI expenditures - and enable further growth.
SAP XETR:SAP fell over 16% on Thursday. Although the overall figures remained solid, the projected path for cloud growth disappointed market participants.