Four of the biggest companies on earth reported last night. All four beat revenue. All four raised capex. Two of them got bought. Two of them got sold. The market finally has its answer on AI spending: the money is real. And it's flowing to the companies that build, not the companies that spend.

Big day. The S&P 500 gained 1% to hit a new all-time high. The Nasdaq rose 0.9% — also a record. The Dow led the way, up 790 points. The Russell 2000 rose 1.6%, its best day in two weeks. April is closing out as the best month for the S&P since 2020 — up roughly 10% on the month.

The Dow's move tells the story. Caterpillar ran 10% after beating on earnings and raising its revenue outlook. The company's backlog is at a record — driven by construction demand from the AI data center build-out. CAT is up 160% in the past year and 41% in 2026. It's now one of the best proxies for AI in the entire market, and it makes bulldozers.

Then there was Alphabet. Google Cloud revenue was up 63% from a year ago at $20 billion. Cloud backlog nearly doubled to $460 billion. Alphabet's capex is heading to $190 billion for the year. Stock gained 7%. The market paid for that capex because the revenue showed up with it.

The other two hyperscalers didn't get the same treatment. Meta beat on revenue — up 33% — but raised capex to $125 to $145 billion. Stock fell 7%. Microsoft beat on earnings and Azure grew 40%, but capex hit $31.9 billion in the quarter and the company guided spending to $190 billion. Stock lost 4%. Same earnings season, same capex, opposite reactions. The difference: Alphabet showed revenue growth faster than the capex. Meta and Microsoft showed capex growing faster than the revenue.

Qualcomm was the stealth winner — up 16% on a beat and a note about a hyperscaler custom chip deal. Eli Lilly gained 9% after Mounjaro sales were up 125% year over year. Teradyne up 14%. Quanta Services up 13%. The gainers list reads like the supply chain for a physical build-out: chips, pharma, construction, electrical infrastructure.

Oil eased. WTI pulled back to around $105 from yesterday's $115 Brent. The International Energy Agency said it now expects global oil demand to contract this year for the first time since COVID — down 80,000 barrels a day. That's war-driven demand destruction working its way through the system. California gas hit $6 a gallon today — up 30% since February.

Stocks don't price today. They price the next six to twelve months. And today the market answered the three questions that have been hanging over the tape all week.

Question one: will the hyperscalers keep spending? Answer: yes. All four raised capex. Microsoft guided to $190 billion for the year. Alphabet to $190 billion. Meta to $125 to $145 billion. Amazon said AWS growth is the fastest it has been in fifteen quarters. The capex commitment is confirmed. That's why Caterpillar, Qualcomm, and Quanta Services all ripped — the order book for the physical build-out just got stamped.

Question two: will the customer show up? Answer: some of them. Google Cloud grew 63% with a backlog that nearly doubled. That passed the test. Meta's user growth disappointed even though ad revenue was up 33%. Microsoft's Azure grew 40% but the capex came in hot and the revenue growth didn't keep pace. When a company spends faster than it earns, the market has a word for it — dilution. Not the shares kind. The returns kind. When every dollar of capex generates less than a dollar of incremental revenue, the value of the company goes down even if the top line goes up. On Wall Street, this is what they call negative operating leverage — the machine gets bigger but the margins get thinner.

Question three: does the economy hold? Answer: yes, but it's running hot. GDP came in at 2% for the first quarter — below the 2.3% the Street expected. Core PCE is at 3.2%, highest since January 2024. Jobless claims came in at 189,000 — lowest since 1969. The economy isn't shrinking. But inflation is above 3% and the labor market is still tight. That's the combination that keeps the Fed exactly where it is.

I've seen this rotation before. Fourth quarter 2010. The tech rally after QE2 was real, but the market's leadership shifted from the cloud software companies to the industrials and materials names that were actually building the infrastructure. The software companies still went up — just slower. The industrial names ran for the next six months. When the market decides who gets the check, it doesn't go back and change its mind quickly.

The forward-looking read: April closes tonight as the best month for stocks since 2020. The S&P is up 10% on the month. But the leadership is shifting underneath. Tech is no longer the only story. Industrials, health care, and energy are all outperforming for the year. The AI trade is alive but it just changed shape — from software margins to physical build-out. Apple reports after the close tonight. It's the last name standing. If Apple guides well on services and shows the iPhone base is holding, the month closes on a clean note. If it disappoints, Friday gets interesting.

Three things I'm watching:

Apple reports fiscal Q2 around 4:30 p.m. Eastern. The Street is looking for $117 billion in revenue. The key line isn't hardware — it's services revenue, which has been growing 17% a year. If services hold, Apple validates the consumer side of the tech story that Meta missed on today. If services slow or guidance comes in soft, it confirms what the Michigan and PCE numbers have been saying: the consumer is stretched.

Consensus is around 130,000 jobs with unemployment at 4.3%. Today's jobless claims at 189,000 — lowest since 1969 — says the labor market is still tight. Wage growth is the tell. Hourly earnings above 4% keeps the Fed locked in. Under 3.8% gives Warsh a card to play at his first meeting. With core PCE at 3.2% and the Fed's widest dissent in 33 years, the jobs report either confirms the hawks or hands the doves their argument.

The IEA said today it expects global oil demand to contract for the first time since COVID. But Brent is still above $110. The gap between supply fear (Iran, Hormuz, UAE exit from OPEC) and demand destruction (IEA, airlines cutting routes, California at $6 gas) is widening. If demand wins, oil comes in and the rate-cut story gets easier. If supply wins, the Fed stays stuck and energy stays the best sector for the rest of the year. That gap is the most important chart nobody's watching.

The market picked its winners today. Shovels over software. Cash flow over capex. Real economy over cloud promises. That's the tape going into May.

That's it for today. See you tomorrow after the close.