Fed holds rates steady at first 2026 meeting; Meta and Microsoft beat earnings
Jan 28, 2026
Key Points
- The Federal Reserve held rates steady at its first 2026 meeting, signaling no near-term cuts despite political pressure from Trump to install a rate-cutting successor to Jerome Powell.
- Meta beat earnings on revenue and profit while raising 2026 capital expenditure guidance, lifting stock 4% after hours; Microsoft beat consensus but fell 4% on signals of slowing cloud growth.
- AI infrastructure companies are burning cash at scale: OpenAI and Anthropic are each losing $15–30 billion annually despite 300–500% revenue growth, a dynamic dependent on sustained capital availability.
Summary
The Federal Reserve held rates steady at its first 2026 meeting, confirming what prediction markets had already priced in. Political pressure to cut rates has given way to guidance pointing to no near-term cuts. Trump is vetting candidates to replace Jerome Powell as Fed chair but faces a constraint: appointees may signal rate cuts in interviews and then act independently once confirmed, making it difficult to install a loyalist without sacrificing market credibility.
Meta reported earnings beating consensus on revenue and profit, with stock up 4% in after-hours trading. The company is expanding its 2026 capital expenditure guidance.
Microsoft beat consensus on both metrics but shares fell 4% in extended trading after signaling slowing cloud growth.
Tesla reported negative revenue growth for the first time but stock rose 3.7% after hours. The divergence suggests investors are pricing growth expectations differently across the AI infrastructure complex.
OpenAI is raising at an $800 billion valuation with an estimated $30 billion in 2026 revenue but negative $30 billion free cash flow. Anthropic is raising at $500 billion with $20 billion in 2026 revenue and negative $15 billion free cash flow. When Google reached a $500 billion valuation, it had $90 billion in revenue and $20 billion in profit. Anthropic and OpenAI are growing at 300–500% or higher, which explains much of the valuation gap. The cash burn profiles are severe and dependent on continued capital availability.