Strong quarterly results and fresh confidence in artificial intelligence (AI) carried US and European equities higher on Wednesday. The mood turned more cautious overnight, however, as Asian chipmakers came under pressure and investors questioned the returns from heavy AI investment.
Global markets at a glance
Equities rally on earnings and AI optimism
In the US, the Nasdaq Composite closed 1.1% higher, while the Dow Jones Industrial Average added 0.7% and the S&P 500 gained 0.6%. European markets also recovered, with technology and energy stocks at the front of the rebound.
The positive tone did not carry into Asian trading this morning. Semiconductor stocks fell as investors grew uneasy about the payback on heavy AI investment, and US equity futures moved lower, signalling a softer open on Wall Street.
Bond yields diverge across the US and Europe
US Treasury yields declined for a second straight day amid concerns over AI valuations and demand for safer assets. Fiscal deficit concerns, however, continue to weigh on longer dated debt.
In Europe, the picture was different. The yield on French 10-year government bonds reached 5%, a level last seen in 2002, amid political and fiscal uncertainty. UK gilt yields moved higher after September inflation rose to 3.5%, reducing expectations of near term rate cuts. The US dollar held broadly steady as markets looked ahead to the next Federal Reserve meeting.
Oil rises on Middle East supply risks
Oil prices pushed above $110 per barrel as tensions in the Middle East intensified. Reports of potential further US and Israeli strikes on Iran, attacks in Saudi Arabia and continued threats to shipping through the Strait of Hormuz have raised fears of supply disruption.
Other factors also supported prices. US crude inventories fell by 3.1 million barrels, a larger drop than expected, and attacks on Russian energy infrastructure added to supply concerns. Any further escalation could intensify inflationary pressures and delay interest rate cuts.
Technology earnings put AI spending in focus
Meta revenue beats expectations
Meta Platforms reported third quarter revenue of $64.6bn, up 26% and ahead of expectations. Its guidance for the fourth quarter was also stronger than forecast. Capital expenditure is expected to reach $135bn to $145bn this year, a sign of how rapidly its investment in AI infrastructure is growing.
New non-voting shares could give the company more room to raise capital, fund acquisitions and attract talent while preserving Mark Zuckerberg’s voting control. Rising legal liabilities, however, remain a risk to watch.
Tesla margins and cash flow improve
Tesla delivered better than expected third quarter results, with adjusted earnings of $0.48 per share on revenue of $28.05bn. Automotive margins strengthened and free cash flow recovered to $1.53bn. Questions remain about the cost and delivery of the company’s ambitious robotics, robotaxi and chipmaking plans.
Chipmakers face a more selective market
Lam Research beat expectations for the quarter, but its outlook for earnings fell short of forecasts. This revived concerns over semiconductor investment and contributed to selling pressure across Asian chipmakers.
Texas Instruments exceeded expectations, with revenue rising 28% year on year to $6.06bn, supported by improving demand from industrial, automotive and data centre customers.
Taken together, these results highlight that AI related spending continues to benefit chipmakers, equipment suppliers and data centre infrastructure providers. The sharp share price moves after some reports, however, suggest that investors are becoming more selective, questioning whether this level of investment will produce sufficient returns. Elevated valuations and financing costs are fuelling debate over a possible AI investment bubble.
Enterprise software and European results
Beyond the largest technology names, enterprise software results were also encouraging.
SAP and IBM point to recovering software demand
SAP grew cloud revenue by 26% and its cloud backlog by 28%, leading the company to raise its full year cloud revenue outlook. IBM reported a 4.7% increase in revenue to $17.1bn, with software revenue up 8.3%. IBM also lifted its annual software growth forecast as previously delayed deals started to close.
These figures suggest that corporate spending on software is picking up. This could widen the group of companies that benefit from AI adoption beyond semiconductor and infrastructure businesses.
EssilorLuxottica beats expectations as Adidas posts record revenue
EssilorLuxottica reported third quarter revenue of €7.49bn, ahead of forecasts. Solid demand for traditional eyewear made up for slower growth in smart glasses.
Adidas posted record third quarter revenue of €7.25bn, an increase of 9%, while operating profit climbed 37% to €1.01bn. Better margins and strong full price sales supported an upgraded 2026 operating profit outlook, although a €200m tariff refund also contributed.
Other company news
BlackRock launched an exchange traded fund (ETF) focused on robotics and related technologies, showing that demand for targeted AI exposure remains firm despite recent volatility. CrowdStrike broadened its partnership with NVIDIA to improve security for AI systems and autonomous agents, underlining the growing role of cybersecurity as AI adoption gathers pace.
Elsewhere, eBay plans to reduce its workforce by around 9% as it shifts investment towards faster growing parts of the business. The European Commission is investigating Booking.com over its measures against fraudulent listings and other possible breaches of digital services rules.
What to watch next
Markets continue to draw support from resilient earnings and steady AI investment. Investor confidence, however, increasingly depends on whether this spending leads to lasting revenue growth, profitability and cash generation. The latest weakness in Asian technology stocks suggests that demand for AI infrastructure alone may no longer be enough to support current valuations. Inflation, government borrowing and geopolitical tension remain the key risks, particularly if higher energy prices delay monetary easing.
The coming sessions bring a mix of economic data and major corporate results.
Economic data
In the US, investors will look at initial and continuing jobless claims, the Conference Board Leading Economic Index and manufacturing data from the Kansas City Federal Reserve. US Treasury bill auctions and the Federal Reserve’s balance sheet will also be in focus.
Corporate results
Key corporate results include Roche, Procter & Gamble, Nestlé, L’Oréal and Union Pacific, alongside Hermès.
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