This morning we called Microsoft the AI spender that pays from cash. By breakfast it was in the bond market.
Microsoft launched its first U.S. investment-grade bond sale since 2017, about $25 billion. Orders peaked above $115 billion, according to people familiar with the deal cited by Bloomberg.
The same day, Alphabet fell about 13%. Lenders piled in as stockholders bailed. That split is today's Sip.
The S&P 500 fell about 0.3% and the Nasdaq about 1.4%. The Russell 2000 rose about 1%.
3 MOVERS IN 3 MINUTES
1. Caterpillar's orders run to 2030. The stock fell anyway.
Caterpillar (CAT) dropped about 9% even though earnings beat forecasts. Power generation sales jumped 30% on data-center demand, and the backlog hit a record $78.1 billion. But Caterpillar kept its 2026 sales growth forecast at mid-to-high teens, short of the roughly 18% analysts expected, per Reuters. Quanta (PWR), Vertiv (VRT) and GE Vernova (GEV) all rose. One reading: investors aren't doubting the power buildout. They're asking how much of it reaches Caterpillar's profit.
2. Private credit wrote ADT's whole check.
ADT (ADT) jumped about 33% after agreeing to be taken private for $10 a share, about $15.3 billion with debt. The buyer is Thrive Holdings, formed by Josh Kushner's venture firm. Financing commitments came "solely" from funds managed by Apollo (APO) affiliates. Blue Owl (OWL) raised $12.6 billion, up from last quarter but below a year ago, with a record from institutions. Redemption requests at its largest non-traded credit fund fell again. The stock rose about 8%.
3. Kalshi's price rose a day after its founders were charged.
Kalshi, which is private, raised $1 billion at a $40 billion valuation, up from $22 billion in May. It came a day after Utah filed criminal charges against Kalshi and its co-founders over sports contracts. Kalshi said its non-sports markets bring in more than $1 billion of annualized revenue. Investors seem to be paying for a business with a big piece outside Utah's fight.
3 SIGNALS FOR TOMORROW
1. Amazon reports into a split market. Amazon (AMZN), down about 4% today, reports after the close, with consensus near $1.97 a share. Amazon has sold jumbo bonds before, so borrowing won't shock anyone. What it could change: if operating cash covers capital spending, Alphabet looks like the exception. If not, Thursday's selling may be the first round.
2. Coinbase reports as the NYSE's owner plans 24/7 futures. Coinbase (COIN) and Strategy (MSTR) report tonight, with bitcoin near $80,700. Earlier, Intercontinental Exchange (ICE) agreed to run a U.S.-regulated market for Hyperliquid-based perpetual futures across crypto, stocks, commodities and currencies, pending approval. ICE rose about 5%. What it could change: these contracts trade mostly offshore today. A regulated U.S. venue would compete with crypto exchanges for that volume.
3. Friday's wage data tests an investment-led economy. GDP grew at a 3.4% annual rate last quarter, and the pickup came mainly from investment and government spending. But real consumer spending was flat in September. The Employment Cost Index lands at 8:30 a.m. Hot wages would firm up a December rate hike. Soft wages would sharpen the squeeze on households.
Now, back to the bond deal.
AI's "All In" Moment
In the dot-com days, former Wall Street money manager Alexander Green bought Apple under $1. Netflix at $1.62. Amazon under $2. (Split adjusted.)
Now he's doing the same with AI.
And he says it's the biggest opportunity he's seen in 40 years.
Every few decades, a window opens that can change your financial life forever.
The Sip
The AI giant that pays its own way just borrowed. Lenders offered over four times as much.
Microsoft (MSFT) filed Thursday morning to sell ten series of notes, from two to 40 years. Bloomberg, citing people familiar, put the size at $25 billion and peak orders above $115 billion. Final pricing wasn't out at send.
It said it would
On Wednesday's call, finance chief Amy Hood said Microsoft "will access additional sources of funding when we believe it is attractive to do so." She named leasing, which Microsoft already uses. On debt markets, she said, "we haven't yet, I would say, tapped that." By morning, it had.
Why a cash machine borrows
Free cash flow last quarter was $18.6 billion, after capital spending. Microsoft returned $10.2 billion to shareholders. That leaves about $8.4 billion, and capital spending is set to rise to more than $50 billion this quarter.
It could have cut its buyback, as Alphabet did, or sold stock, as Alphabet and Meta have. It borrowed. Its bonds outstanding totaled $35.5 billion at the end of September, against $470.5 billion of shareholders' equity. Even with $25 billion more, the debt stays small. The prospectus lets proceeds go to spending, buybacks or other uses. Microsoft hasn't said which.
WARNING: A Major Market Shift Could Hit Stocks in 2026
If you have any money in the stock market, you may want to pay attention.
New research points to a massive market-moving event that could send hundreds of popular stocks into a sudden free fall.
Holding the wrong stocks when this hits could erase years of gains.
That’s why analysts have now identified a list of stocks investors may want to avoid as this event unfolds.
If you want to see what’s coming — and which stocks could be most at risk —
Lenders and owners took different tests
Bond buyers wanted four times the deal. Stock buyers dumped Alphabet and barely moved Microsoft.
Both can be right. A bondholder needs Microsoft to pay interest and return the principal. With positive cash flow and a AAA rating, that's easy. A shareholder needs about $170 billion of spending this year to earn more than it costs. That's still an open question.
Investors aren't punishing borrowing. They're punishing borrowing that stands in for cash flow. Alphabet raised money with negative free cash flow. Microsoft is borrowing with positive cash flow and its buyback intact. That's one reading, and Amazon tests it tonight.
Where 40-year paper goes
Alphabet, Amazon and Meta have sold jumbo bonds for about a year, The Wall Street Journal noted. Microsoft was the holdout. Now all four compete with Washington for buyers of long-dated debt.
There was no strain Thursday. The 10-year yield fell to about 4.99%. But Microsoft's bonds settle Nov. 4, per Bloomberg. That's the day the Treasury announces its quarterly refunding.
What settles it
Initial talk on the 40-year note was up to 1.35 percentage points over Treasuries. If the final price lands well inside that, lenders are paying up for AAA AI exposure. If the bonds weaken once they trade, demand was softer than the headline.
FREE Gold Ticker to Buy ASAP: (NYSE:___)
Jim Rickards – the world’s #1 gold expert – has just revealed one of his favorite gold plays… 100% FREE
As Jim sees it, we’re witnessing the biggest gold boom of the last 100 years – and those who keep their money on the sidelines are missing their chance at a fortune thanks to gold’s epic run.
But smart investors who get in now, could make 10X their money in the coming months.
The Market Sips Takeaway
On Thursday, financing for AI wasn't scarce. Proof that the spending pays was.
- What would confirm it: Microsoft prices tight and its bonds hold, and Amazon's operating cash covers its spending.
- What would break it: the new bonds weaken, or long Treasury yields jump into the Nov. 4 refunding.
- Where it shows up next: long-dated Treasuries, private lenders like Apollo and Blue Owl, and weaker borrowers who pay more if buyers get choosier.
The bond market says Microsoft is good for the money. The stock market still wants to know if the money is good for Microsoft.
UNTIL THEN, SIP SLOWLY!
The Market Sips Desk
Would you rather lend to Microsoft for 40 years or own its stock for the next five? Hit reply and tell us why.
Same Rate Move. Three Different Bills.
The 10-year went from 4.19% to 5.29% this year. Every company on your screen felt that. They don't feel it on the same schedule.
Some earn more when rates rise. Some pay more. The difference shows up in earnings, one report at a time.
We traced three of them: IBKR, WRB and FIS.
FREE Special Report: Rates Just Reset. Who Feels It First?
Who earns it fast. Who earns it slowly. Who pays. One has already reported. The other two report next, and the report tells you the exact line to check.
We'll text the report straight to your phone.
Text Me the Three Names → (free)