US Q3 Earnings Season Kicks Off Next Week: Nvidia and Micron May Contribute About One-Third of Profit Growth; AI Infrastructure Capex and Power Bottlenecks Heat Up

US Q3 Earnings Season Kicks Off Next Week: Nvidia and Micron May Contribute About One-Third of Profit Growth

The US third-quarter earnings season will get fully underway next week. According to Goldman Sachs’ latest forecast, S&P 500 third-quarter earnings per share are expected to grow 27% year over year, the fastest since 2021, but growth is highly concentrated in a handful of technology and energy giants.^[1]

Goldman data show Micron is expected to contribute 19% of S&P 500 third-quarter earnings growth, while Nvidia contributes 15%; together, the two companies’ incremental contribution is roughly equal to the combined contribution of the other 490 constituents. The next-largest contributors are Meta, Alphabet and Broadcom, at 7%, 6% and 5%, respectively; Exxon Mobil, Chevron and Marathon Petroleum benefit from higher oil prices amid the Strait of Hormuz situation, and Boeing also ranks in the top ten. The top ten contributors are expected to account for 68% of third-quarter earnings growth, far above 47% in the first quarter and 48% in the second quarter.^[1]

Goldman also noted that market breadth has fallen to its lowest level since the dot-com bubble: the S&P 500 is just 2% from its record high, but the median stock is down an average of 17% from its own high; the median S&P 500 constituent is expected to post just 9% third-quarter EPS growth, down further from 14% in the second quarter. Morgan Stanley strategist Mike Wilson believes the divergence between the index near a record high and a large number of individual stocks in bear-market drawdowns “will eventually converge in some way,” and bond market volatility may be the ultimate “judge.”^[1]

Thematically, AI infrastructure is the single largest source of earnings growth. Goldman expects “AI infrastructure (excluding hyperscalers)” to contribute 54% of third-quarter earnings growth, with hyperscalers adding another 19%, together accounting for about three-quarters of S&P 500 earnings growth. At the sector level, energy sector third-quarter EPS are expected to rise 109% and information technology 64%, together contributing about 80% of quarterly earnings growth. By contrast, consumer discretionary earnings are expected to be roughly flat, while consumer staples are expected to post negative growth.^[1]

Micron was first out with results on Sept. 30: adjusted EPS of $33.42, above the $31.83 market expectation; adjusted revenue rose to $54.2 billion from $11.2 billion a year earlier; gross margin reached 87%, far above 45.7% a year earlier; and the company guided for next-quarter revenue of $60 billion to $63 billion, well above the $56.77 billion consensus. But the big earnings beat did not bring a commensurate surge in the stock, because the market had already priced in even higher growth expectations.^[1]

AI Infrastructure: Google’s Capex This Year Is Expected to Top $200 Billion, With Power the Fundamental Bottleneck

The largest capex buildout in human history is under way. Amin Vahdat, Google’s head of AI infrastructure, said in a recent in-depth conversation that Google’s capex this year is expected to exceed $200 billion, mostly for data center construction; the rise of long-horizon agents is fundamentally changing data center design logic, not only boosting demand for accelerators but also causing demand for CPUs, networking and storage to “surge” in tandem.^[2]

Vahdat disclosed that Google must roughly double its serving-side token generation capacity about every six months, and the main source of that growth is not hardware itself but the continuous accumulation of software and model optimizations. He characterized FLOPS as a “vanity metric,” arguing that actual workload performance depends on how thousands or even tens of thousands of accelerators, CPUs, networking and storage work together, and that at a scale of 100,000 accelerators “something is always breaking.”^[2]

For investors, the key implication of his assessment is that power is the most fundamental bottleneck to AI infrastructure expansion, not chips or manufacturing capacity; software optimization’s contribution to capacity gains is “very likely no less than hardware’s”; and on the TPU road map, inference and training chips were split into separate product lines for the first time this year, reflecting the rapid expansion of the inference market.^[2]

SpaceX Plans to Raise Another $40 Billion to Finance Nvidia Chip Purchases

Citing people familiar with the matter, the Financial Times reported that SpaceX plans to raise $40 billion through about $10 billion of bank loans and $30 billion of investment-grade bonds to fund large-scale purchases of Nvidia chips. Apollo is expected to lead the transaction and distribute the debt to a broad range of institutional investors; bond giant Pimco is also among a small group of lenders in talks, with the deal expected to be completed in 2027.^[4]

On SpaceX’s August earnings call this year, Musk said explicitly that the company had decided to build entirely on Nvidia’s platform, saying “we think the Vera Rubin architecture is the optimal architecture,” with Vera Rubin being Nvidia’s latest-generation frontier AI computing platform. The comment further clarified the technology path for the large-scale chip purchases.^[4]

SpaceX’s ability to push through such a large debt financing is closely tied to its investment-grade credit rating: it received a BBB rating shortly after completing an $86 billion IPO in June this year, and completed a $25 billion investment-grade bond issuance less than two weeks after listing. The investment-grade rating allows its bonds to enter the broader allocation universe of insurers, pension funds and other institutions. Still, its bonds are already showing signs of strain: according to MarketAxess data, its 2056 maturity is trading at about 85 cents on the dollar, with a yield about 2.27 percentage points above US Treasuries, approaching junk-bond levels.^[4]

Oracle’s 1.3 GW Wisconsin Data Center Faces Delay Because ‘the Power Can’t Connect’

The data center construction crisis at Oracle continues to spread. After the Jupiter project in New Mexico declared force majeure, the 1.3 GW hyperscale data center “Project Lighthouse” in Wisconsin is in jeopardy again—not because of site selection or funding, but because the power cannot be connected. According to a latest report from data center research firm Aterio, the project’s transmission approval process has been sent back to the starting point by the Wisconsin Public Service Commission (PSC), restarting the statutory review clock from zero. Following the news, Oracle shares fell 1.8% that day; the company did not publicly respond.^[6]

The project is located in Port Washington, Wisconsin, developed by Vantage Data Centers with Oracle as the tenant, and is part of OpenAI’s Stargate buildout. Total power demand is 1.3 GW, with critical IT load of about 902 MW. Its power bottleneck lies in the campus’s reliance on American Transmission Company (ATC) building a new high-voltage transmission line, and ATC must obtain PSC approval before construction can begin. According to reports, ATC’s application had previously been deemed a “complete application,” but the company subsequently supplemented or resubmitted 564 documents, adding a new route option and a temporary bypass line. On Aug. 7 this year, the PSC commissioners unanimously revoked the earlier completeness determination, and on Sept. 10 closed the case without ruling on the substance; ATC refiled its application on Sept. 18.^[6]

ATC initially planned to start construction in December 2026 and complete it by the end of 2027, matching Oracle’s previous commitment to “deliver to customers in the second half of 2027,” a plan that has now formally fallen through. Aterio extrapolated three scenarios: in the optimistic scenario (less likely), partial power in October 2027 and full 1.3 GW power in August 2028; in the base case, partial power in December 2027 and full power in October 2028; and in the pessimistic scenario, full power would be delayed until spring 2029.^[6]

China’s Central Bank Buys Gold for a 23rd Straight Month, Accelerating in September

With international gold prices continuing to fluctuate, China’s central bank is still accelerating its gold purchases. On Oct. 7, People’s Bank of China data showed that China’s gold reserves stood at 77.47 million ounces (about 2,409.59 tonnes) at the end of September, up 740,000 ounces (about 23.02 tonnes) month over month, higher than the 650,000 ounces added in August alone; at the end of August, gold reserves were 76.73 million ounces (about 2,386.57 tonnes). China’s central bank has now increased its gold holdings for a 23rd consecutive month.^[3]

Meanwhile, data from the State Administration of Foreign Exchange showed that as of the end of September 2026, China’s foreign exchange reserves stood at $3.4003 trillion, down $38.1 billion, or 1.11%, from the end of August. In September 2026, influenced by factors including the global macroeconomic environment and monetary policies of major economies, the US dollar index rose and prices of major global financial assets generally fell; the combined effect of exchange-rate translation and asset price changes drove the decline in foreign exchange reserves that month.^[3]

On gold prices, Wind data showed that COMEX gold futures fell 6.52% in September. HSBC cut its gold price forecasts, citing expectations that the US will raise interest rates further and that higher oil prices may pressure gold in the short term. The bank expects gold to average $4,490 an ounce in 2026, below its previous forecast of $4,560, and lowered its 2027 average forecast to $4,825 an ounce from $4,925.^[3]

Deutsche Bank research showed that CTAs currently hold their largest net short position since October 2021. In the past month alone, CTAs have sold 52% of their largest position size, a monthly outflow in the 3rd percentile historically.^[3]

France Proposes Deficit-Cutting Plans in Quick Succession as US and European Bond Selloff Pauses

France has recently proposed a flurry of deficit-cutting plans in an attempt to reverse its deteriorating fiscal position, and pressure on the French bond market has eased temporarily: the yield on French 10-year government bonds fell about 12 basis points on Tuesday to around 4.75%, and the spread over comparable German bonds also narrowed.^[5]

According to The Wall Street Journal, French Finance Minister Roland Lescure said the government is willing to negotiate the budget but has two red lines: keeping the budget deficit below 5% of GDP and avoiding measures that damage economic growth. If parliamentary negotiations reach a deadlock, the government is prepared to invoke Article 49.3 of the French constitution to bypass the National Assembly and directly push through a spending-cut plan totaling about 43 billion euros (about $48 billion).^[5]

Compared with the government, the fiscal consolidation plan put forward by Le Pen’s National Rally is more aggressive: it plans to cut spending by more than 140 billion euros, reduce next year’s deficit to 3.7% of GDP and further to 2.2% by 2032, with measures including squeezing domestic spending, reducing transfers to the EU and cutting immigration-related spending. UBS market analyst Nana Antiedu said that after Le Pen published a “shadow budget,” French government bonds continued to outperform, with the 10-year OAT yield falling 12 basis points to 4.74%; but it remains only a shadow budget, representing her party’s policy intentions if it comes to power, and implementation would still require support from other parties.^[5]