Rates Unchanged, Two Votes for a Hike
On October 28, the U.S. Federal Reserve announced it would keep the federal funds rate target range at 3.75% to 4.00%, in line with market expectations. The decision passed by 10 votes to 2, with the two dissenters favoring a 1-notch hike, showing vigilance over inflation risks. The statement said U.S. economic activity remained strong, domestic spending showed resilience, and business capital investment stayed robust, but inflation remained elevated, and future monetary policy will adjust based on economic data and inflation progress. Unchanged policy rates do not mean funding conditions will ease immediately. Large technology companies continue to expand AI data center investment, and U.S. long-term Treasury yields and corporate borrowing costs remain important factors for investment decisions.
Cloud Revenue Doubles, Shares Still Plunge After Hours
U.S. stocks closed higher across the board on October 28, with the Dow Jones Industrial Average up 0.19%, the S&P 500 up 0.28%, the Nasdaq up 0.27%, and the Philadelphia Semiconductor Index up 1.76% to close at 11,684 points. TSMC ADR rose 0.60% to close at $439.51. After plunging 6.72% on October 22, the SOX continued to rebound, showing restored confidence in AI chip and semiconductor demand. Alphabet reported its Q3 2026 results, with quarterly revenue of about $127.58 billion, up 25% year-on-year, including Google Cloud revenue of about $30.71 billion, up 103% year-on-year, showing still-strong demand for enterprise AI infrastructure and cloud services. The strong growth did not dispel concerns. Alphabet's Q3 capital expenditure was about $51.36 billion, operating cash flow was about $42.29 billion, and free cash flow was about negative $9.07 billion, with overall revenue and profit missing some market expectations, and its shares fell more than 10% at one point in after-hours trading. This reflects a shift in market focus from revenue growth to capital spending and profitability, with investors paying more attention to the payback period for AI infrastructure. Operators must invest upfront in GPUs, servers, networking equipment, power and cooling systems, sharply increasing short-term spending, while revenue and cash flow may not grow in tandem. Negative free cash flow does not mean financial distress. For tech giants with huge revenue and funding capacity, it may be part of an expansion phase, with the key being whether future earnings can cover the investment and improve capital efficiency.
Taiwan Stocks Top 47,000 as Institutions Turn Net Buyers
Alphabet's results are a useful reference for Taiwan's electronics industry. Cloud operators expanding data centers drives demand for high-end chips, AI servers, high-speed networking and cooling equipment, with TSMC (2330), Hon Hai (2317), Quanta (2382), and Wiwynn (6669) all linked to the related supply chain. For high-end PCB materials, EMC (2383), ITEQ (6274), and King Core (8358) are also attracting attention on high-speed transmission and material upgrade demand. But higher capital spending does not mean suppliers will improve profitability in tandem. High-priced computing chips for AI servers lift full-system revenue, while key component costs are also relatively expensive, so system assemblers' revenue growth may not translate proportionally into higher gross margins. High-end PCB and cooling suppliers also face customer qualification, capacity expansion, ramp-up yields and cost pass-through issues. If operators adjust build-out schedules due to funding costs or payback pressure, procurement timing could also be affected. Beyond monthly revenue and order visibility, the focus should be on changes in gross margin, operating margin and operating cash flow.
Taiwan stocks rebounded strongly on October 28, with the weighted index surging 939.35 points to close at 47,035.58 points, up 2.04%, with turnover of about NT$722.135 billion, retaking the 47,000-point mark. TSMC rose NT$25 to close at NT$2,425, MediaTek (2454) rose 6.94% to close at NT$4,235, with high-end PCB and electronic components rising in tandem. Institutional flows improved, with foreign investors turning net buyers of NT$15.922 billion, investment trusts net buying NT$11.807 billion, and dealers net buying NT$2.165 billion, for a combined net buy of about NT$29.894 billion by the three major institutions. Whether the rebound continues on the 29th will depend on international tech stock performance, buying in electronics heavyweights, and how the market interprets AI infrastructure returns. To see if 47,000 holds, besides watching TSMC, MediaTek and the AI server group, attention should also be paid to trading volume, market breadth and whether foreign buying persists.