Amazon and Intel grew sales at double-digit rates last quarter and their stocks still crashed out last night.

Shortly after the closing bell Thursday, Amazon was down more than 4.8% and Intel was down 15%. As it happens, that’s the same treatment the market gave Alphabet and Caterpillar a day earlier.

Strong quarters are not enough in the era of heavy AI capital expenditures. Investors want proof all the spending pays off.

Amazon’s net sales rose 12% to $201.9 billion, and AWS sales jumped 39% to $45.98 billion, which marked the cloud unit's fastest growth in nearly five years.

Plus, operating margin hit 13.9%, the highest in the company's history.

Amazon, though, still expects some $220 billion in capital expenditures this year, which still might be too high for the market to stomach currently.

As for Intel, revenue climbed nearly 21% to $16.5 billion, and adjusted earnings came in at 52 cents a share.

Data center and AI sales soared nearly 78% to $7.3 billion, Intel's strongest data center growth in 15 years.

Intel’s outlook disappointed. The company guided fourth-quarter revenue to $15 billion to $16 billion, below the latest quarter, and expects adjusted gross margin to fall to 38% from 44.1%.

You don’t have to look far for a crystal ball on what might happen as trading kicks off Friday.

Alphabet missed earnings estimates 24 hours before Amazon and Intel, and Thursday morning it opened down 11.7%, its biggest post-earnings gap down since it went public in 2004.

And yet Alphabet's revenue grew nearly 25% to $127.57 billion, and it’s tracking for almost half a trillion dollars in revenue for the year, as I explained on air at the New York Stock Exchange.

But because revenue and earnings both missed estimates, and Google Search grew “only” 12% to $63.35 billion, investors were not pleased.

Free cash flow came in at negative $9.06 billion after $51.35 billion in capital expenditures, its second straight quarter below zero.

Similarly, Caterpillar opened Thursday’s session down 10.8%, its biggest earnings gap down since July 2002.

Sales rose 17% to $20.68 billion and backlog hit a record $78.1 billion, but the company “only” reiterated its prior outlook.

Four examples in a row of just how high the earnings bar has climbed.

Investors have already paid for the AI buildout, so they're selling anything that suggests it could slow or cost more than expected.

🏦 The US economy grew at a 3.4% annualized pace in the third quarter. That's up from 2.2% in the second quarter, according to the government's first estimate. (BEA)

📈 Inflation picked up in September. The PCE price index rose 3.6% from a year earlier, and core PCE, the Fed's preferred gauge, rose 3.1%. (Yahoo Finance)

📉 Initial jobless claims fell to 194,000 for the week ending October 24. That's down from a revised 195,000 the week before. (AP)

Adam Parker is the founder and CEO of Trivariate Research and the former chief US equity strategist at Morgan Stanley. We sat down to discuss why the AI cycle is only about a third done, the bull case for Micron, why buy-and-hold investing and adding to losers have stopped working, and his bullish call on healthcare.

Tune in on Spotify, Apple Podcasts, or YouTube.

🗓 October 30, 1929: The Dow rebounded 12.3% the day after Black Tuesday, at the time its biggest one-day gain ever. It's still the index's third-best day on record.

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