Chip stocks sank 11%; Meta’s cash test is Wednesday

Wheelhouse Weekly · October 18, 2026

The week ahead, October 19–23, built from Friday’s closing data. English first; the full French version follows.

This week in three lines

• The AI trade cracked. Chip stocks lost 11% and 25 of the 26 names on Eddie’s watchlist fell, with a median drop of 12.6%. Investors turned on companies that borrow to build AI capacity.
• Meta’s cash test is Wednesday. Last quarter it kept $784 million of $31.9 billion of operating cash and borrowed $24.9 billion. $TSLA reports the same evening, $SPCX on Tuesday, $BE on Thursday.
• Setup #1 is $META. A $650 put, studied in full below. Wednesday’s report falls inside its expiry, so it stays watch-only.

The lead · Investors want cash flow, not AI debt

Hot inflation set the tone: September consumer prices rose 3.7% from a year earlier. Then the market turned on companies that borrow to build AI capacity. CoreWeave has taken on more than $51 billion of debt and obligations; on Thursday, the price of insuring its debt against default passed 1,000 basis points, a level S&P Global Market Intelligence says generally signals distress. $CRWV and $NBIS each fell 25% on the week, and the PHLX Semiconductor index lost 11.4%. Evercore ISI’s trading desk summed it up: the market is “basically saying ‘no mas’ to AI debt without operating cash flow support.”

The big spenders held up: $META and $MSFT slipped only about 1%. They pay for the build mostly out of operating cash, though they borrow too: Alphabet, Amazon, Meta and Oracle had issued more than $228 billion of bonds this year by October 13, more than double all of 2025, according to LSEG.

And look how little cash is left at Meta. In the quarter to June 30, it generated $31.86 billion of operating cash and spent $31.08 billion on capex, finance leases included. Free cash flow fell to $784 million from $8.55 billion a year earlier. Meta bought back no shares and raised $24.91 billion of new long-term debt.

Wednesday is Meta’s cash test. It expects $130–145 billion of capex this year and guided Q3 revenue to $61–64 billion. The bull case: ad revenue grew 28% last quarter, and the build adds capacity Meta can fill for years. The bear case: if spending keeps outrunning cash flow, more of it gets financed with debt, which is exactly what the market just punished. Every chip and cloud supplier on the watchlist will be listening.

For a put seller, a broad drop cuts both ways. Premiums are richer (the VIX closed at 19.99, up from 14.84 a week earlier), but correlated names fall together: puts on $MU, $NBIS and $CRWV are closer to one bet than three. Setup #1 is on the company the whole trade is watching.

Setup #1 · $META $650 put, November 20

Watch-only: earnings inside the expiry. The study: sell one $650 put expiring November 20, 2026. If assigned, you buy 100 shares at $650. Prices are Friday-close Cboe delayed quotes; reprice at Monday’s 09:30 open and assume no fill.

• Why own the shares: the ad business funds the build: Q2 revenue rose 28% to $60.80 billion, and cash and marketable securities of $90.26 billion exceed long-term debt of $83.66 billion. The catch: almost no cash is left after investment, so the payoff has to show up in revenue.
• Trend: Friday close $709.33, after a 3.7% drop on the day. Below the 20-day average ($735.77), above the 50- and 200-day ($654.96 / $631.07). RSI(14) 50.3: neutral. Volume 0.93× its 20-day average.
• Contract: bid/ask $14.10/$14.75, a tight $0.65 spread. Delta −0.24, implied volatility 45%, open interest 4,775. The $1,410 credit is 2.2% of the cash reserved over the 32 days from Monday to expiry; breakeven sits 10.4% below Friday’s close.

2 more setups for PRO members

• $TSLA $325 put, Nov 20: breakeven $316.80, 10.7% under Friday’s close, on a stock that fell five days straight into Wednesday’s report.
• $MSFT $500 put, Nov 20: $890 of premium on $50,000 of cash; earnings on October 28 (the day of the Fed decision) and a $0.98 ex-dividend date on November 19 both fall before expiry.

[Read all three setups in full →](https://yieldcove.com/en/tips/meta-week-ahead-wheel-setups-october-18-2026-2026-10-18) Strike logic, event checks and what would change each plan. Opens Sunday at 08:00; full access with YieldCove PRO.

Last week’s setups · the check-up

All three of last week’s studies were watch-only, and this week shows why. $AKAM closed Friday at $87.81, below the $91.20 breakeven of its $95 put. $MU closed at $878.84, below the $927.05 breakeven of its $950 put. $AMKR, at $41.82, sat just above its $41.25 breakeven. A rich premium paid for real risk.

The week ahead · Toronto time

• Tue Oct 20, 08:30: September housing starts. After the close, $SPCX reports; webcast at 16:30.
• Wed Oct 21, after the close: $META (call at 16:30) and $TSLA (webcast at 17:30) report.
• Thu Oct 22, after the close: $BE reports; call at 17:00.
• Next week: $CDNS and $AMKR report Monday, October 26, $HOOD on Tuesday, then $MSFT and $GOOGL on Wednesday, October 28, the day the Fed announces its rate decision.

Watchlist · what changed

• $MU / $DRAM: China’s CXMT said it had made progress on a denser memory design, and memory stocks sank on Tuesday. $MU fell 14.6% on the week, the $DRAM fund 18.8%.
• $ORCL: caught in the AI-debt selloff: down nearly 9% on Wednesday and 9.3% on the week, as the cost of insuring its debt rose about 10% in a week, to 282 basis points.
• $RKLB: Rocket Lab moved Neutron’s first launch to 2027 (October 14). Shares fell 25.5% on the week.
• $TSLA: the long-delayed next-generation Roadster was shown on Thursday; CNBC sees no material financial impact. Shares fell five days straight, 7.3% on the week.
• $MSFT: on October 12, Microsoft said its in-house Maia 200 chip already runs production work, including Copilot, and Maia 300 deployments start in 2027. Results on October 28.

From Eddie’s tracker

Eddie bought back last week’s $TSLA $425 covered call on Monday for $0.25 a share, keeping $60 of the $85 credit before fees. On Wednesday he sold a $SPCX $130 put expiring November 20 for $2.45 ($245). It is still open going into SpaceX’s report on Tuesday. A record of his trades, not a recommendation.

Free tool: before you sell a put this week, write down the cash at stake, the earnings date and your exit line, with the free wheel spreadsheet. Missed an issue? Browse the archive.

Photo: A Meta data center (built when the company was Facebook) beside Highway 126 in Prineville, Oregon, photographed on July 8, 2014. Gary Halvorson, Oregon State Archives / Wikimedia Commons, CC BY 4.0.

AI-assisted editorial: researched by Codex, edited by Claude. Educational information, not personalized investment advice. Figures exclude fees and taxes; early assignment is possible. No trades were executed for this newsletter.