Market Beats | Amazon Signs $38 Billion AI Cloud Deal With OpenAI; US Factory Activity Contracts for Eighth Straight Month in October; US Corporate Layoffs Mount, Hinting at Cooling Labor Market; Alphabet to Sell $22 Billion in Bonds to Fund AI and Cloud Expansion; Microsoft Strikes $9.7 Billion AI Capacity Deal With Australia’s IREN; Ares Earnings Surge 122% as Private Equity Secondaries Boom; Palantir Boosts Revenue Outlook to $4.4 Billion

—— Amazon Signs $38 Billion AI Cloud Deal With OpenAI; US Factory Activity Contracts for Eighth Straight Month in October; US Corporate Layoffs Mount, Hinting at Cooling Labor Market; Alphabet to Sell $22 Billion in Bonds to Fund AI and Cloud Expansion; Microsoft Strikes $9.7 Billion AI Capacity Deal With Australia’s IREN; Ares Earnings Surge 122% as Private Equity Secondaries Boom; Palantir Boosts Revenue Outlook to $4.4 Billion

1. Amazon Signs $38 Billion AI Cloud Deal With OpenAI

Amazon.com Inc.’s cloud arm, Amazon Web Services, has signed a $38 billion, seven-year agreement to supply computing power to OpenAI, the maker of ChatGPT — marking one of the largest AI infrastructure deals to date. Amazon shares surged on the news.

Under the agreement announced Monday, OpenAI will pay AWS for access to hundreds of thousands of Nvidia Corp. graphics processing units, underscoring its massive demand for computing power.

The deal highlights OpenAI’s evolution from a research lab into an artificial intelligence juggernaut reshaping the tech landscape. The company has committed to spending an unprecedented $1.4 trillion to build and maintain infrastructure for its AI models, raising concerns of a potential investment bubble.

For Amazon, which has lagged rivals in the AI boom, the partnership serves as a validation of its ability to design and operate vast data center networks. “As OpenAI continues to push the boundaries of what’s possible, AWS’s best-in-class infrastructure will serve as a backbone for their AI ambitions,” said AWS CEO Matt Garman.

Until now, it had stood apart as most other US cloud giants raced to partner with OpenAI by building or retrofitting data centers to support its rapid expansion.

Amazon shares jumped 4.5% to $255.29 at the New York open Monday, while Nvidia climbed 3.3% to $209.20. AWS remains the world’s largest seller of rented computing capacity.

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2. US Factory Activity Contracts for Eighth Straight Month in October

US manufacturing activity shrank for an eighth consecutive month in October, weighed down by weaker production and sluggish demand.

The Institute for Supply Management’s manufacturing index fell 0.4 point to 48.7, the group reported Monday. Readings below 50 signal contraction, and the gauge has been stuck in a narrow band for most of this year.

The production index dropped 2.8 points to 48.2 — marking the second contraction in the past three months — while employment remained weak. The ISM’s employment gauge declined for a ninth straight month, though at a slower pace than in September.

Inflationary pressures continued to subside. The prices-paid index for raw materials fell 3.9 points to 58, the lowest since early 2024, and nearly 12 points below its April peak during the height of tariff disruptions.

With the US government still shut down, economists and policymakers are increasingly relying on private-sector reports such as ISM’s survey to gauge economic and labor trends. The official employment report, scheduled for Friday, is also likely to be delayed.

A total of 12 manufacturing industries contracted in October, led by textiles, apparel, and furniture. Six industries — including primary metals and transportation equipment — reported growth.

The survey underscores broad weakness across US factories as trade-policy uncertainty persists. Manufacturers are adapting supply chains, and ISM’s supplier-delivery index rose to a four-month high, signaling longer lead times.

New orders shrank for a second month, albeit more slowly, while backlogs also declined. Factory inventories fell by the most in a year, and customer stockpiles remained low — suggesting some potential for future order rebounds to support production.

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3. US Corporate Layoffs Mount, Hinting at Cooling Labor Market

When Starbucks Corp. fired 900 corporate employees in September, few economists were alarmed — the company had already conducted a February downsizing as part of management’s turnaround plan. In October, Target Corp. cut 1,800 positions to streamline operations. Amazon.com blamed its 14,000 corporate layoffs on artificial intelligence. Paramount Global let go of 1,000 workers after completing a merger, and Molson Coors cut 400 as health-conscious consumers drank less beer.

Individually, these layoffs can be viewed as isolated cases. Taken together, however, economists warn the trend could signal deeper weakness in the US job market.

The picture has been particularly murky amid the ongoing government shutdown, which has halted data releases from key agencies such as the Bureau of Labor Statistics. Even before that, President Donald Trump’s efforts to slim down the federal government had already left holes in the statistical system. Private reports are helping fill the void.

According to a report from outplacement firm Challenger, Gray & Christmas, US employers announced nearly 950,000 job cuts through September — the highest year-to-date total since 2020. Excluding the pandemic year, that figure already surpasses the full-year total for any year since the Great Recession in 2009. “When something is almost the worst since the Great Recession, that’s not a very encouraging number,” said Andy North, an analyst at Challenger.

Government employees have borne the brunt, with nearly 300,000 cuts announced so far this year, while technology and retail have also been hit hard. Southwest Airlines Co. — long known for its job stability — carried out its first large-scale layoffs in company history earlier this year, underscoring how the wave of corporate cuts is spreading beyond traditional hotspots.

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4. Alphabet to Sell $22 Billion in Bonds to Fund AI and Cloud Expansion

Alphabet Inc. is preparing to issue roughly $15 billion of bonds in the US and €6.5 billion ($7.48 billion) in Europe, joining a wave of tech firms raising debt to fund massive investments in artificial intelligence and data centers.

According to people familiar with the matter, the Google parent is marketing up to eight tranches of US dollar bonds, with maturities ranging from three to 50 years. The longest-dated notes may yield about 1.35 percentage points above comparable US Treasuries. The euro-denominated offering came in €250 million larger than expected. The debt sales mark Alphabet’s first since April, when it also tapped both sides of the Atlantic.

Alphabet’s recent earnings underscored surging demand for its AI and cloud services. The new debt deal comes just days after Meta Platforms Inc. issued $30 billion of notes — the year’s largest corporate bond sale.

Technology giants’ massive bets on AI-driven infrastructure are driving record levels of capital spending. Morgan Stanley estimates that hyperscalers — companies like Alphabet, Microsoft, Amazon and Meta — will spend about $3 trillion on data center infrastructure between now and 2028, with roughly half funded by cash flow.

Issuance is expected to remain active into early November as frequent borrowers rush to tap markets before year-end, JPMorgan strategists Eric Beinstein and Nathaniel Rosenbaum wrote in a Monday note. “There is room for spreads to widen a little bit more as investors digest the wave of AI-related issuance,” they said. “But given strong earnings and attractive yields, a broader selloff seems unlikely.”

The borrowing spree is already nudging corporate bond spreads higher. The average US investment-grade spread rose 2 basis points to 78 basis points on Friday, Bloomberg index data show.

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5. Microsoft Strikes $9.7 Billion AI Capacity Deal With Australia’s IREN

Microsoft Corp. has signed a roughly $9.7 billion agreement to buy artificial intelligence computing capacity from IREN Ltd., making the Australian firm its largest customer.

The five-year deal gives Microsoft access to Nvidia Corp. systems in Texas designed for AI workloads and includes a 20% prepayment, IREN said in a Monday statement. The Sydney-based company will buy about $5.8 billion worth of GPUs and related hardware from Dell Technologies Inc. to support the contract.

The agreement underscores Microsoft’s aggressive push to secure computing power amid surging AI demand. Over the past year, the Redmond-based software giant has signed several multibillion-dollar partnerships with data center operators such as IREN and CoreWeave Inc. as it competes to build the infrastructure powering next-generation AI systems.

Separately, Microsoft announced on Monday that it plans to invest more than $7.9 billion over the next four years in the United Arab Emirates, focusing on data centers, cloud infrastructure, and hiring. The move follows US approval for AI chip exports to the Gulf region, and Microsoft President Brad Smith pledged to nearly triple the number of Nvidia chips deployed in the country.

IREN belongs to a class of data center firms known as “neoclouds” — operators that specialize in providing the advanced computing capacity required for AI workloads. Competitors such as CoreWeave Inc., Nebius Group NV, Crusoe Inc., and Nscale are also vying to serve major hyperscalers like Microsoft and AI developers including OpenAI. Many, including IREN, started as bitcoin mining operations before pivoting to AI infrastructure.

Once fully implemented, the Microsoft-IREN partnership is expected to generate roughly $1.94 billion in annualized revenue, CEO Daniel Roberts said in an email. The deal will use about 10% of IREN’s total capacity, leaving room for future contracts and additional growth opportunities.

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6. Ares Earnings Surge 122% as Private Equity Secondaries Boom

Ares Management Corp. reported a sharp rise in earnings driven by its private equity secondaries business, as institutional investors continued to unload fund holdings to boost liquidity.

Fee-related earnings for the firm’s secondaries unit hit $74 million in the third quarter — up 167% from a year earlier — according to a Monday statement. Most of the new capital commitments went toward private equity secondary deals.

Ares shares rose more than 5% to $156.76 in New York trading. As exits in traditional private equity have slowed, institutions have increasingly turned to selling stakes in existing funds, a trend that has buoyed secondary-market specialists such as Ares.

Strong performance in the secondaries, credit, and real assets businesses lifted Ares’ total fee-related earnings to $471.2 million, up 39% from a year ago. Net profit available to shareholders climbed to $263.6 million — a 122% surge — beating analysts’ average estimate of $237.2 million, Bloomberg data show.0

Ares recently said it plans to raise $8 billion to invest in AI-driven data centers, underscoring its push into fast-growing infrastructure sectors. Still, its core buyout business posted a 21% earnings decline due to higher expenses.

The firm’s dealmakers were also rewarded handsomely: compensation and benefits rose 51% to $659.8 million, with about $404 million tied to performance-based pay.

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7. Palantir Boosts Revenue Outlook to $4.4 Billion

Palantir Technologies Inc. raised its full-year revenue forecast to $4.4 billion after posting third-quarter results that beat Wall Street expectations, fueled by surging demand for its artificial intelligence and data analytics software.

Revenue rose 63% to $1.18 billion in the quarter ended September, topping analysts’ estimates of $1.09 billion. The company expects fourth-quarter sales of about $1.33 billion, compared with a consensus projection of $1.19 billion. Adjusted profit was 21 cents per share, above the average estimate of 17 cents.

Palantir has now exceeded revenue expectations for 21 consecutive quarters, according to Bloomberg data. CEO Alex Karp described the company’s growth as “in a nosebleed zone,” adding, “No one else is here.”

Shares climbed as much as 7% in after-hours trading before paring gains. Palantir’s stock has soared more than 150% this year, giving it one of the highest valuations in the S&P 500 — about 85 times expected sales over the next 12 months.

The AI boom has made Palantir one of its biggest public beneficiaries. Founded in 2003 with backing from Peter Thiel and the CIA’s venture arm, the company provides software that integrates data from disparate sources and uses AI to accelerate decision-making — from optimizing corporate efficiency to shortening military response times.

Its US commercial revenue jumped 121% year-over-year to $397 million, while government contracts in the US climbed 52% to $486 million in the third quarter.

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