At 2 PM Eastern on Wednesday, Federal Reserve Chairman Kevin Warsh will announce the central bank's rate decision. At 4 PM, Microsoft and Meta will release quarterly earnings. In that window, the market receives the price of capital and then the quantity consumed.
The Fed is expected to hold its benchmark rate at 3.50 to 3.75 percent for a fifth consecutive meeting. CME futures assign a 64 percent probability to a hold and roughly 30 percent to a hike. But the decision investors are watching is not today's. It is September's. Governor Waller said on July 6 that the risks have "completely flipped." Warsh told Congress on July 14 that the central bank has "no tolerance for persistently elevated inflation." Bank of America projects three 25-basis-point increases before year-end. Deutsche Bank projects two. The May Consumer Price Index came in at 4.2 percent, a three-year high.
## The Bill
Microsoft's fiscal fourth quarter is expected to show approximately $87.7 billion in revenue and $4.24 in earnings per share. Meta's second quarter is expected to show approximately $60.2 billion in revenue and $7.18 in earnings per share. The revenue numbers will matter. The capital expenditure numbers will matter more.
Microsoft plans to spend approximately $190 billion in capital expenditure during fiscal 2026. Its fourth-quarter spending alone is expected to exceed $40 billion. Meta raised its full-year capex guidance to between $125 billion and $145 billion, up from between $115 billion and $135 billion, citing higher component prices and data center costs. Its second-quarter capex is expected near $33.7 billion, nearly doubling year over year.
Alphabet offered the preview. Its second-quarter capital expenditure reached $44.9 billion. Free cash flow turned negative for the first time since its 2004 initial public offering. The company raised capex guidance to between $195 billion and $205 billion. The stock fell 7 percent.
Across Amazon, Alphabet, Microsoft, and Meta, combined 2026 capital expenditure commitments now exceed $725 billion, up 77 percent from $410 billion in 2025. Goldman Sachs estimates $489 billion in AI-related debt has been issued this year, with hyperscalers selling $244 billion in bonds in the first half, fourteen times the 2024 pace.
## The Contrast
Apple reports Thursday. Its capital expenditure budget for 2026 is between $13 billion and $14 billion. On Monday it closed as the most valuable company in the world at approximately $4.95 trillion. The Philadelphia Semiconductor Index, which tracks the companies that build and supply the infrastructure, has fallen 20 percent in four weeks, erasing approximately $3.3 trillion since June 22.
The company spending the least on AI is worth the most. The index tracking the companies that supply the spending is in a bear market.
## The Loop
The $725 billion in AI infrastructure spending is itself contributing to the inflation the Federal Reserve is responding to. Data center construction absorbs concrete, copper, skilled labor, and electricity. It bids up energy prices. It tightens labor markets. The capital expenditure that produces the earnings Microsoft and Meta will report at 4 PM is producing the inflationary pressure Warsh will address at 2 PM.
The defendant is generating the evidence.
If Warsh signals tightening, the cost of the $489 billion in AI debt already issued rises. The $725 billion in committed capex gets repriced at a higher rate. The earnings Microsoft and Meta report two hours later are already locked. The spending happened. But the cost of that spending just changed.
Four technology companies entered 2026 planning to spend more on infrastructure than any industry has spent on anything in a single year. The Federal Reserve entered 2026 expecting to cut rates. Neither got what they expected. The companies are spending more than they planned. The Fed is considering its first rate increase under a new chairman.
At 2 PM the market learns what capital costs. At 4 PM it learns how much was consumed. The order matters.