Meta’s free cash flow turned negative. Now 3 AI giants report

Wheelhouse Weekly · October 25, 2026

The week ahead, October 26–30, built from Friday’s closing data. English first; the full French version follows.

The week in three lines

• Meta’s free cash flow turned negative. It was −$2.12 billion last quarter. $META fell 7.0% the day after its report and 9.4% on the week.
• Three more AI spenders report. $MSFT and $GOOGL on Wednesday, October 28, the day of the Fed’s rate decision, then $AMZN on Thursday, October 29. Options price moves of 5% to 8% by Friday, October 30.
• Setup #1 is $AMZN. A $230 put, studied in full below. Amazon reports before expiry on November 20, so it stays watch-only.

The lead · Meta’s cash test came back negative

Last week we called Meta’s report a cash test. The answer came on October 21. In the third quarter, Meta generated $32.79 billion of operating cash and spent $34.91 billion on capex, finance leases included. Free cash flow was −$2.12 billion, against +$10.63 billion a year earlier. Revenue still grew 26%, to $64.60 billion. But Meta raised the bottom of its 2026 capex range to $135 billion, from $130 billion, and said it expects to keep investing aggressively in 2027. The stock fell 7.0% the next day.

Meta is not alone. In their latest reported quarters, Alphabet and Amazon also spent more on capex than their businesses brought in as operating cash. Only Microsoft kept a large surplus, and even that surplus shrank. All three report next: Microsoft and Alphabet on Wednesday, with calls a few hours after the Fed’s 2:00 p.m. rate decision, and Amazon on Thursday.

For a put seller, the bull case is that this capacity fills up and pays off for years, funded by businesses that still grow fast. The bear case is what the market just did to Meta: when spending outruns cash, more of it gets financed with debt, and the shares get repriced. Here is the move options price for each report, up or down, by Friday, October 30. For scale, $META fell 7.0% the day after its October 21 report.

Those moves are the market’s estimate, not a ceiling. Before selling a put into a report, check that you would still want the shares at your breakeven if the stock moved further than that. Setup #1 runs that test on Amazon.

Setup #1 · $AMZN $230 put, November 20

Watch-only: earnings inside the expiry. The study: sell one $230 put expiring November 20, 2026. If assigned, you buy 100 shares at $230. Prices are Friday-close Cboe delayed quotes; reprice at Monday’s 9:30 a.m. open and assume no fill.

• Why own the shares: AWS and advertising fund the build, and on October 21 AWS put TorchNeuron, a native PyTorch backend for its Trainium chips, into public beta. The catch: over the 12 months to June 30, free cash flow was −$7.60 billion, against +$18.18 billion a year earlier. The spending now has to show up in revenue.
• Trend: Friday close $248.00, after a 4.6% drop on Thursday. Below the 20- and 50-day averages ($254.43 / $255.65), above the 200-day ($243.29). RSI(14) 43.2: neutral to soft. Volume 0.70× its 20-day average.
• Contract: bid/ask $5.05/$5.25, a tight $0.20 spread, with 18,274 contracts open. Delta −0.25, implied volatility 47%. The $505 credit is 2.2% of the cash reserved over the 25 days from Monday to expiry. Breakeven sits 9.3% below Friday’s close, beyond the 7.9% move options price by October 30.

2 more setups for PRO members

• $MSFT $495 put, Nov 20: $775 of premium on $49,500 of cash, with the breakeven 7.1% below Friday’s close. Wednesday’s report and a $0.98 ex-dividend date on November 19 both fall before expiry.
• $BE $170 put, Nov 20: the richest premium of the three, $720 on $17,000, after an 11.2% drop on Friday. It is the one we pass on, and the post explains why.

[Read all three setups in full →](https://yieldcove.com/en/tips/amzn-week-ahead-wheel-setups-october-25-2026-2026-10-25) Strike logic, event checks and what would change each plan. Opens Sunday at 8:00 a.m.; full access with YieldCove PRO.

Last week’s setups · the check-up

All three of last week’s studies were watch-only, because each company reports before expiry. $META shows why: it fell 7.0% the day after its report and closed Friday at $642.62, below the $650 strike and just 1.1% above the $635.90 breakeven. The put that paid $14.10 now quotes $29.70/$29.85: buying it back near the mid would mean a paper loss of about $1,570 per contract for anyone who sold before the report. $TSLA went the other way, up 4.9% on the week to $372.22, far above its $316.80 breakeven. $MSFT, at $524.51, sits 6.8% above its $491.10 breakeven going into its report.

The week ahead · Toronto time

• Monday, October 26: $AMKR reports after the close (call 5:00 p.m.); $CDNS holds its call at 5:00 p.m.
• Tuesday, October 27: $HOOD reports after the close (call 5:00 p.m.); $ENPH holds its call at 4:30 p.m. The Fed’s two-day meeting begins.
• Wednesday, October 28: Fed rate decision at 2:00 p.m., press conference at 2:30. $GOOGL holds its call at 4:30 p.m.; $MSFT reports after the close (call 5:30 p.m.).
• Thursday, October 29: $AMZN holds its call at 5:00 p.m.; $INTC reports after the close (call 5:00 p.m.).

Where only a call time is listed, the company has not said whether results come out before the open or after the close.

Watchlist · what changed

• $BE: third-quarter revenue rose 138% to $1.24 billion, and Bloom raised its 2026 outlook for the third time this year. The stock still fell 12.7% on the week, including 11.2% on Friday.
• $TSLA: third-quarter revenue was flat at $28.05 billion. Operating income fell to $718 million from $1.62 billion, and free cash flow to $1.53 billion from $3.99 billion. The stock rose 4.9% on the week.
• $GOOGL: down 6.0% on the week to $320.21, below its 200-day average ($340.99), with an RSI(14) of 31.3 going into Wednesday’s report.
• $META: beyond the cash, Meta plans to give shareholders one new non-voting Class C share for each share they own, a 2-for-1 effect on the share price. The new charter takes effect January 19, 2027; the record and payment dates are not set.

From Eddie’s tracker

The $SPCX $130 put we noted last week is closed. Eddie sold it on October 14 for $2.45 a share ($245). He bought it back for $1.06 on Wednesday, October 21, and kept $137.02 after fees in 7 days; SpaceX had reported the day before. A record of his closed trades, not a recommendation.

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

Photo: the Amazon Spheres at Amazon’s Seattle headquarters, with a tower going up behind them, May 2, 2018. Andy Li / Wikimedia Commons, CC0 1.0.

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.