The DeepStack Weekly

What changed since No. 2

New this week: Part 14, The Cash Arrives Unevenly.
On the calendar: Oct 21, 2026: Meta reports its September quarter; users, transaction volume and fees would show whether downloads are becoming a business.
On the calendar: Oct 28, 2026: Alphabet's September quarter: whether capital spending takes 80 cents or more of each dollar of operating cash, after 49.5 cents a year earlier and 95.0 cents in the first half of 2026.
10-year Treasury: 5.24% to 5.09%.
2-year Treasury: 4.80% to 4.74%.
30-year Treasury: 5.60% to 5.43%.

The week, in our words

The Cash Arrives Unevenly. Microsoft, Alphabet, Amazon and Meta spent 96 cents on property and equipment for each dollar of operating cash in the second quarter of 2026, up from 65 cents across 2025, by DeepStack's reading of SEC filings. Microsoft still pays from its own cash. Amazon spent $1.38 per dollar in the first half.

The next test is on the calendar. Oct 20, 2026: The federal price data for August: whether the median twelve-month rise in household prices across PJM's nine jurisdictions stays at least four points above the median of the other 42, from 11.7% against 5.6% in July.

This week in The Buildout · Part 14

The Cash Arrives Unevenly

Microsoft pays for its data centers from its own cash with room to spare. Alphabet and Meta now spend most of theirs and Amazon more than all of it; Alphabet and Amazon have covered the gap with stock and bonds. DeepStack reads the filings company by company and names the October 28 report that tests the view.

The DeepStack CallMixed

Microsoft pays for its build from its own cash. Alphabet and Meta spend most of theirs; Amazon spends more than its operations bring in.

Only Microsoft pays with room to spare · Conviction Moderate (3/5)

Divide capital spending by operating cash, company by company: in the first half of 2026 Microsoft spent 65.3%, Amazon 137.8%.
Hold free cash flow to one ruler: Meta's own measure gave $784 million for the June quarter of 2026; cash less purchases, $1.7 billion.
Read the financing section beside the spending line: Alphabet sold $49.6 billion of stock in June 2026, and Meta borrowed $24.9 billion.

Read the investigation · 10 min

The numbers that moved

10-year Treasury: 5.09%; −15 bp this week
2-year Treasury: 4.74%; −6 bp this week
30-year Treasury: 5.43%; −17 bp this week
10-year real yield: 2.74%; −17 bp this week
S&P 500: 7,659; −1.9% this week
Brent crude: $126.55; +0.4% this week

Data: U.S. Treasury; S&P Dow Jones Indices via FRED; EIA via FRED

Notes under pressure · 5 of 5

Note 04 · Above the 5% line
The gap between the earnings yield and the 10-year is almost gone.
What would change our read. Our read eases if the 10-year closes below 5.00%, or if forward earnings rise about 6% at today’s prices. That would cut the multiple to 17.9x and put the earnings yield 50 basis points above the 10-year.
Note 01 · Curve steepening
The long end is doing the tightening.
What would change our read. If the long end falls while the Fed holds, the market is pricing weaker growth rather than heavier supply. Cheaper long money would ease the financing math in Parts 03 and 08, and we would say so.
Note 03 · Input costs rising
The cheap electron is American.
What would change our read. If US gas climbs toward European levels, or copper breaks lower on slowing grid orders, the scarcity premium in Part 06 is moving, and our read moves with it.
Note 02 · Profits ahead of productivity
Profits are running ahead of productivity.
What would change our read. Productivity growth above 2% a year for two straight quarters would start to close the gap. A fall in profits with productivity flat would tell us the denominator was borrowed.
Note 05 · Real money is expensive
Debt is a contract written in real terms.
What would change our read. A 10-year real yield back below 2% would cut the real cost of the buildout’s debt. Breakevens rising toward 3% would mean the bond market has started to believe the households.

Chart of the week · Live

Profits ran ahead of the economy

US corporate profits against output per hour, both indexed to 100. Move the starting line and watch the gap Part 10 calls the denominator.

Run the numbers yourself

Also in The Buildout

Part 13Markets
The Ratepayer Pays First
Data centers pay for the wires they cause. The higher capacity price their demand sets reaches every household in PJM first. DeepStack reads both bills and names the federal price data and the December auction that will test the view.
Part 12Markets
The Model Is Not the Price
The token is cheap and getting cheaper; the labs' revenue is counted in the tens of billions, and none of it is audited on EDGAR. DeepStack reads the model's price as a four-month lease and the lab's price as a line in a filing the public has yet to read.
Part 11Markets
The Backlog Is Not the Quarter
AI suppliers report record order books. DeepStack reads the near book as revenue, the far book as a promise and the margin as the number that arrives last.

The Docket: dates that will settle the argument

Oct 20, 2026
The federal price data for August: whether the median twelve-month rise in household prices across PJM's nine jurisdictions stays at least four points above the median of the other 42, from 11.7% against 5.6% in July.
Part 13: The Ratepayer Pays First
Oct 20, 2026
September-quarter results test cash flow toward $2 trillion and whether maintenance costs enter accounting.
Part 08: AI Lenders Are Financing the End of Scarcity
Oct 21, 2026
Meta reports its September quarter; users, transaction volume and fees would show whether downloads are becoming a business.
Part 09: Habit Was the Moat. Agents Are Draining It.
Oct 28, 2026
Alphabet's September quarter: whether capital spending takes 80 cents or more of each dollar of operating cash, after 49.5 cents a year earlier and 95.0 cents in the first half of 2026.
Part 14: The Cash Arrives Unevenly