Hey Superheroes,
CPI rose to 4.3% over this year to September, up from 4.0% in August, as housing, fuel and healthcare pushed prices broadly higher. Above the RBA target band of 2-3%. The September quarter trimmed mean came in at 1.0%, ahead of the Reserve Bank’s own forecast of 0.8%. Markets are pricing a 25 basis point hike at around an 85% probability for next Tuesday’s decision, which falls on Melbourne Cup day and would take the cash rate to 4.85%. This would be the first Melbourne Cup Rate Rise since 2023.
Meanwhile, the US Federal Reserve rate was held at 3.75% to 4.00% at its 28 October meeting, pausing after September’s first hike since 2023. With the Fed on hold, the RBA faces its November decision on a domestic inflation read alone, without a tightening prompt from Washington to follow.
Among Australian retailers, Wesfarmers (ASX:WES) shares fell 3.2% after management flagged that Bunnings sales growth moderated over the first quarter of FY27, citing weaker seasonal and commercial categories alongside elevated inflation and rising rates. JB Hi-Fi (ASX:JBH) and Super Retail Group (ASX:SUL) both issued first-quarter trading updates on the same day, with comparable sales down 1.4% as shoppers held their spending ahead of Black Friday promotions. Coles Group (ASX:COL) had a tough day despite reporting that same-store food sales up 2.7% in Q1 FY27. Management also warned that fuel costs would weigh on near-term profits leading to a 13% share price drop.
The RBA meets 3 November, with the rate decision and quarterly Statement on Monetary Policy due at 2:30pm AEDT.
Every cloud has a cash burn
Alphabet (NASDAQ:GOOGL) spent much of 2026 defending its AI capital spending against investor concern about returns. This quarter, Google Cloud delivered the most concrete evidence yet that the investment is working. The cost of proving it, measured in free cash flow, hit a new low.
The quarter
Revenue rose 25% to US$127.6 billion in the three months to 30 September, short of the US$128.2 billion analyst consensus. Google Search and other services grew 12% to US$63.4 billion. Operating income rose 30% to US$40.6 billion, with a 31.8% operating margin. Net income fell to US$26.2 billion from US$35.0 billion a year earlier, reflecting a non-recurring US$8.7 billion loss on equity securities rather than operational deterioration.
The cloud surge
Google Cloud revenue rose 103% to US$30.7 billion, up from US$15.2 billion a year earlier and ahead of the roughly US$29.6 billion analyst estimate. Cloud operating income came in at US$11.1 billion, up from US$3.6 billion a year earlier, showing the segment is now generating meaningful profit as it scales. Google Cloud has become Alphabet’s fastest-growing business by a significant margin, driven by enterprise AI adoption and data centre capacity demand from clients building large language model infrastructure.
The cash burn
Free cash flow was negative US$9.1 billion for the previous quarter, against negative US$5.9 billion in the June quarter, as capital expenditure of US$51.4 billion outpaced operating cash flow of US$42.3 billion. The gap is the direct result of Alphabet’s data centre and AI infrastructure buildout: the company is spending more on physical assets than it is generating from operations, a dynamic it shares this quarter with Meta Platforms (NASDAQ:META), which also turned free cash flow negative. The arithmetic is straightforward: capex exceeds operating cash flow and free cash flow turns negative until one of those two numbers changes.
What the capex commitment leaves open
With operating income at US$40.6 billion and a 31.8% margin, the underlying business is strong. The net income fall to US$26.2 billion from US$35.0 billion reflects the equity securities loss, not operational weakness. On the cash side, the US$51.4 billion capex against US$42.3 billion of operating cash flow produces the negative free cash flow figure, and Alphabet has signalled that infrastructure spending will remain elevated.
Two questions are unresolved: whether Google Cloud’s 103% revenue trajectory can grow into the cost base faster than capex scales up, and whether capital expenditure commitments start to taper in 2027. This quarter’s numbers do not answer either.
Anthropic files publicly for Nasdaq IPO under ticker ANT
For most of its existence, Anthropic has raised money from private investors at valuations only its board and backers could see. This week it handed those numbers to the public in a formal S-1 filing and set a course for the Nasdaq.
The filing
Anthropic filed its S-1, disclosing plans to list Class A common stock on the Nasdaq Global Select Market under the ticker ANT. Goldman and Morgan Stanley lead the offering, with a broader bank syndicate involved. The registration is not yet effective, meaning the securities cannot be sold, and no pricing date has been announced.
The numbers
H1 revenue was US$16.3 billion, against roughly US$1.2 billion in the same period a year earlier. The full year 2025 brought in US$4.6 billion, making H1 2026 alone more than three times that total. Q2 2026 revenue of US$11.6 billion shows how sharply the growth rate has accelerated. Anthropic’s primary revenue driver is API access to its Claude models, used by enterprise customers building AI applications across industries including finance, legal and healthcare.
What’s not priced yet
The S-1 sets no share count and no price range. The registration is not yet effective and Anthropic has not disclosed when Goldman Sachs and Morgan Stanley plan to take the deal to market. The prospectus includes a US$72.4 billion non-cash accounting charge tied to convertible note fair value adjustments, a number that expands as the company’s valuation rises and that makes conventional profit metrics difficult to read at this stage.
What the prospectus leaves out
H1 2026 revenue of US$16.3 billion exceeded the entire 2025 total of US$4.6 billion, with Q2 alone at US$11.6 billion. But until Goldman Sachs and Morgan Stanley take the pricing roadshow to market, investors cannot weigh that growth rate against a competitive landscape that includes Google Gemini, OpenAI and Meta’s Llama models.
The US$72.4 billion non-cash charge complicates any conventional valuation analysis. What changes the picture is pricing: that roadshow will be the first time the public market sets a number on whether this growth rate supports a listing at the scale Anthropic is seeking.
For more on what this means for local investors, read our Anthropic IPO: a guide for Australian investors.
Some other things we’re shining the Spotlight on:
Wesfarmers flags slower Bunnings sales growth at AGM
At its annual general meeting on 29 October, Wesfarmers (ASX:WES) said Bunnings sales growth moderated over the first three months of FY27, with weaker seasonal and commercial sales in recent weeks, as the group cited elevated inflation and rising interest rates as the macro headwinds. Kmart and Officeworks posted sales broadly in line with the second half of FY26. Mining operations delivered a strong result, partly offsetting the softer retail picture. Wesfarmers shares fell 3.2% to A$74.68 in early trade.
JB Hi-Fi Australia comparable sales slide 1.4% in Q1 FY27
JB Hi-Fi (ASX:JBH) released its first-quarter trading update on 29 October, showing Australian comparable sales fell 1.4% as consumers held off spending ahead of Black Friday. Total Australian sales fell 0.4%. New Zealand was the bright spot, with comparable sales up 10.7% and total sales up 17.3%. Good Guys sales fell 0.4%. JBH shares slipped 0.4%. Management noted that October trading has slowed as consumers delay purchases in anticipation of promotional events.
Coles Q1 food sales up 2.7% but share price sinks
Coles Group (ASX:COL) reported same-store food sales up 2.7% in the first quarter of FY27, holding up better than several retail peers. However management flagged that rising fuel costs would dent near-term profits, a warning that offset the solid food result. COL shares fell A$2.76 to A$20.70 on the day. The liquor division remained a weak spot, with comparable sales expected to decline again.
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