Reports on 8 October put OpenAI\u2019s annualised revenue near $50bn, roughly $20bn below an earlier $70bn figure, but the estimates used different methodologies: some included more cloud-partner sales, while the later figure excluded partners\u2019 share on certain transactions. Bloomberg later said OpenAI expects annualised revenue to reach at least $70bn by end-2026, driven by enterprise customers, though that remains a target. The headline nevertheless rattled AI-linked equities on the day, with the Nasdaq down 1.3% as Nvidia fell 2.9%, AMD slid 3.9% and Oracle dropped 5.5%, and the episode refocused attention on whether profits can match heavy AI outlays.<\/p>\n\n
Capital intensity remains high. Barclays estimates Microsoft, Alphabet, Amazon and Meta spent a combined $165bn on capex in Q2 2026 versus $88bn a year earlier; after that, the group generated about $6.7bn in combined free cash flow. Higher US Treasury yields raise financing costs, while market breadth looks weaker: the equal-weighted S&P 500 ETF rose 0.6% on 8 October but is still below its 20D-EMA band (1 standard deviation), with reference points at 214\u2013216 on the upside and 207 on the downside. By contrast, the S&P 500 is described as still aiming towards 7,950\u20138,000.<\/p>\n\n
As we navigate the market reaction to the recent OpenAI revenue confusion, derivative traders should prepare for short-term volatility while respecting the dominant upward trend. The S&P 500 remains technically strong and is targeting the historic 8,000 level, backed by a clear bull flag pattern. For short-term trading, we favor utilizing call options or bullish vertical spreads on major stock index contracts to capture this continuing momentum.<\/p>\n\n
However, we must manage a sharp divergence as the equal-weighted S&P 500 index continues to trade weakly below its 20-day exponential moving average. This lagging performance suggests that the broader market is failing to keep pace with the AI giants, which sets up a compelling pair-trading opportunity. We can exploit this by purchasing call options on tech-heavy indices while buying put options on the equal-weighted index, targeting a move down toward the 207 level.<\/p>\n\n
Macroeconomic factors also demand our attention, especially with the U.S. 10-year Treasury yield rising past 4.0% in early October, which increases borrowing costs for average corporations. Furthermore, the Q3 earnings season beginning in mid-October will force mega-cap tech firms to justify their massive $165 billion capital expenditures from earlier this year. To trade these upcoming binary events, we suggest using option straddles to capitalize on the inevitable swings in implied volatility.<\/p>\n\n
Should the major indices face a deeper correction, we will look to historical support levels like the 100-week moving average to position long-term protection. Conversely, we expect any short-term rebounds in the equal-weighted index to hit a wall of selling pressure between 214 and 216. Until the broader market proves otherwise, we should continue to buy the dips on major indices while keeping a highly defensive stance on the rest of the market.<\/p>\n\n\n\n