StreetSignal
Market Research Newsletter, News Verification
Dow Jones
Real-Time Financial News Wire
Amazon's miss in its key advertising business was eerily reminiscent of Google's stumble a day earlier on slowing revenue growth from search advertising. Growth in Amazon's ad business decelerated to 12% year-over-year from 26% y/y last quarter. tradingview.com
AlvaChallengesAdvertising growth falling to 12% from 26% the prior quarter sharply weakens an earnings driver beyond AWS and weighs against the long case.
The Transcript
Weekly Earnings-Call Quotes Newsletter
$AMZN CEO: "AWS grew 39.3% year-over-year, accelerating for the sixth straight quarter, our fastest growth in nearly 5 years. Backlog is $578 billion, growing triple digits year-over-year and well diversified." x.com
AlvaSupportsThe $578 billion AWS backlog, growing at a triple-digit rate and described as well diversified, strengthens confidence in sustained cloud demand and supports the long case.Dow Jones
Real-Time Financial News Wire
Meanwhile, Amazon shares dropped 6.5% premarket despite booming growth in its cloud business as it ramped up its spending on AI while advertising revenue growth slowed. tradingview.com
AlvaChallengesSlower advertising revenue growth weakens an earnings driver beyond AWS, adding pressure to the long case as AI spending rises.
Reuters
Global News Agency
Shares of Amazon.com were down 7.2% in premarket trading after the company reported a sharp cash outflow in the third quarter and signaled another increase in capital expenditures next year, on top of already elevated outlays. tradingview.com
AlvaChallengesThe signal of another capital-spending increase next year raises the investment burden further, weakening the case for a recovery in free cash flow after the reported outflow.
Jim Cramer
Host of CNBC’s Mad Money, Leader of the CNBC Investing Club
Now Amazon reported top and bottom line miss for the period, with misses for both the domestic and international retail units negating another strong quarter for the Amazon Web Services cloud business. ... I care much more about AWS, a $180,000,000,000 run rate business, growing an astounding 39% than I care about the low margin retail business at this point. ... For right now, a miss is a miss, even though I think that Amazon's a buy. podcasts.apple.com
AlvaMixedThe post-results buy call supports the long case by placing greater weight on AWS’s 39% growth than on retail weakness, while acknowledging that misses in both domestic and international retail hurt the quarter.Dow Jones
Real-Time Financial News Wire
tech analyst Luke Lango says. ... Lango sees the selloff as an overreaction, given the strong growth rates across Amazon's AI business. AWS grew 39% with margins near 40%, and growth is expected to stay at that level for the next two years, Lango notes. tradingview.com
AlvaSupportsNear-40% AWS margins and the expectation that 39% growth can persist for two years strengthen the case that the selloff offers a buying opportunity.Reuters
Global News Agency
[Amazon] The company expects revenue of $240.0 billion and $247.0 billion in the fourth quarter, compared with analysts' average estimate of $244.51 billion, according to data compiled by LSEG. ... Revenue at Amazon Web Services rose 39% to $46 billion in the third quarter ended September, compared with analysts' estimate for a 38.2% increase to $45.61 billion, according to data compiled by LSEG. tradingview.com
AlvaMixedAWS growth above expectations supports the long case, while fourth-quarter sales guidance with a midpoint below consensus weakens the holiday retail outlook.Reuters
Global News Agency
Q3 EPS USD 1.89 vs. IBES estimate USD 1.96 ... outlook Q4 operating income USD 28,500-33,500 million vs. IBES estimate USD 33,080 million ... Amazon: Free cash flow decreased to an outflow of $42.4 billion for the trailing twelve months tradingview.com
AlvaChallengesThe earnings miss, fourth-quarter operating-income guidance with a midpoint below consensus, and substantial free cash outflow weaken the case for buying Amazon after the drop.
zerohedge
Financial Blog and News Aggregator
From JPM's preview: ... Street estimates for 2027 AWS are too low. Comically low. AMZN Capex is mooning and yet Street estimates are for 2027 AWS Revenue growth to decelerate by 1 point. ... investors across the ecosystem who have been trained to buy major expected KPI revisions see AMZN as an easy beat-and-raise story. But everyone knows that. It's a BIG part of the reason the stock isn't working. x.com
AlvaMixedThe preview argues that AWS growth estimates are too low despite rising capex, supporting an earnings-upside case, but says investors already expect an easy beat-and-raise, which may explain why the stock has not responded.Sam Altman
podcast
If I ask ChatGPT to buy me something and I can choose Amazon versus some other thing... 10 out of 10 times I click Amazon. Pay a higher price. ... I think Amazon's in a great place if commerce moves much more agentic. media.transistor.fm
AlvaSupportsAmazon's brand trust and fulfillment could help it retain an advantage as shopping shifts to AI agents, supporting the case that it remains a favorite.
Bloomberg Surveillance
Bloomberg Finance, Economics and Investment Podcast
Today, demand supplies 13 to 1. So it comes down to those that argue that the demand is not there relative to what the capacity bill that will be. I'll argue it's the opposite. podtrac.com
AlvaSupportsThe claimed demand excess supports the thesis that Amazon’s cloud business can benefit from continued AI infrastructure spending.
Damnang
Semiconductor Engineer in Silicon Valley, AI Chip Investment Research
올라간 HBM 가격이 전체 메모리 시장을 끌어올리면서 내년 1분기 디램 가격도 전분기보다 두 자릿수 비율로 상승할 예정 x.com
AlvaSupportsThe forecast of double-digit DRAM price growth supports the thesis's view that semiconductor expectations remain strong, contrasting with Amazon's muted rally.Damnang
Semiconductor Engineer in Silicon Valley, AI Chip Investment Research
[Quoting @PolarisLog: "삼성전자, 내년 이익 성장, 이미 확보 (KB증권)"] 삼성전자가 HBM4 가격을 업계 최고 수준으로 책정, 내년 HBM 평균판매가격은 올해보다 100에서 150퍼센트 오를 전망 x.com
AlvaSupportsKB Securities' forecast of a 100% to 150% rise in HBM average selling prices supports the thesis that semiconductor markets are pricing sustained AI demand, in contrast with the muted cloud-related signal.Jim Cramer
Host of CNBC’s Mad Money, Leader of the CNBC Investing Club
Amazon and Google's cloud growth is hostage to Anthropic. So we need to see at the very end of the spending chain that this could be a sustainably profitable business that's worth investing in. That's what Anthropic's IPO represents. If there's enough demand that Anthropic's IPO is successful, that will give investors much more confidence that the AI data center theme has legs. Although, we'll also suck a massive amount of money away from the rest of the group just because Anthropics so darn enormous. dts.podtrac.com
AlvaMixedAnthropic's IPO is a test of whether demand underpinning Amazon's cloud growth can become sustainably profitable; a successful deal could bolster confidence in AI spending while drawing capital away from other data-center stocks.Jim Cramer
Host of CNBC’s Mad Money, Leader of the CNBC Investing Club
What do we need to hear from the hyperscalers? Well, if you're hoping for resurgence in the AI data center cohort, these companies need to maintain their gigantic capital spending. That's right. Need to maintain, not cut. ... On top of that, we wanna see the hyperscalers continue to make serious money for the data centers. We've started to see this from some of them, like the excellent cloud infrastructure growth numbers from Alphabet, Microsoft, Amazon. dts.podtrac.com
AlvaSupportsCramer's assessment of strong cloud infrastructure growth at Amazon and its peers supports the view that muted hyperscaler shares may understate cloud earnings, while upcoming results and capital spending remain important checks.
John Coogan
Co-host of TBPN
I believe them on supply. That seems very cut and dry. I don't think anyone has a stronger read on what's actually getting built than them. I think if you look at the satellite photos and you look at the deals that have already been inked, that even though, oh, the Nasdaq sold off 5% last week, like, that's not enough to be like, okay, pack up the dump trucks. We're not building this thing. Like, maybe in months, if things continue to get bad and the rates go up, like, some projects will be delayed or stalled or deals will get unwound. But like right now, it's not that it's full speed ahead. It's just like it's a train. ... You can't you can't slow it down that quickly. Like, it's just gonna keep going. media.transistor.fm
AlvaSupportsThe signed and visible construction pipeline supports the thesis's expectation of sustained near-term AI infrastructure spending despite a 5% Nasdaq selloff, though Coogan says prolonged weakness or higher rates could delay projects.
Dan Ives
Technology Analyst & Partner at Yorkville Ives
Yeah, I think hyperscalers, they're in a total different world relative to not just their balance sheet. And then you look at the enterprises in terms of where they sit, how they're positioned in terms of these strategic build outs, as well as on the data center build out. ... And if you look at the demand and you look at ultimately capacity and where it's going to go, even if you haircut some of the data centers that don't ultimately get billed out, I still think streets underestimate numbers massively over the next one, two years. podtrac.com
AlvaSupportsHis view that established hyperscalers are better positioned and that demand could exceed estimates over the next one to two years supports the thesis's expectation of stronger AI-driven cloud earnings.
Mandeep Singh
Global Head of Technology Research at Bloomberg Intelligence, Host of Tech Disruptors
So it's really your Amazon, Microsoft, and Google. They will shine because their cloud business will show a sequential acceleration. You know, the earnings will reflect that. ... So in the end, I feel because AI demand and usage has gone up, that will show up in the hyperscale cloud earnings. podtrac.com
AlvaSupportsForecasted cloud acceleration at Amazon, Microsoft and Google supports the view that AI demand can lift hyperscaler earnings despite muted share-price expectations.Dan Ives
Technology Analyst & Partner at Yorkville Ives
If we saw CapEx that starts to take foot off the pedal, if we started to see demand rise, deals that we thought were going to happen on the software, on the hyperscaler side. Not happening. So I think that to me is the key. ... Acceleration is happening in terms of demand on chips, hyperscalers, use cases. And that's what I think earning season is going to show. podtrac.com
AlvaChallengesIves expects accelerating hyperscaler demand to appear in earnings, challenging the weak-cloud-earnings premise; slower capex or missing hyperscaler deals would make him less bullish.
Lyn Alden
Investment Strategist, Author of Broken Money
I've been more concerned around the hyperscalers because it's unprofitable uh growth. Uh where whereas I especially in public markets, I mean, I do enough in venture with unprofitable growth. I mean, in public markets, I genally prefer profitable growth uh which is primarily uh confined to semiconductors in that trade. youtube.com
AlvaChallengesHer preference for profitable semiconductor growth over unprofitable hyperscaler growth weakens the case that hyperscaler shares are undervalued relative to chipmakers.