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AMAZON & APPLE SHOW STRONG EARNINGS

ADMIN || 31st October 2025

Amazon has seen some bad weather recently after the Amazon Web Services shutdown and concerns it was losing market share to rivals. But today’s earnings per share beat by 23%, including a 1.9% upside surprise from AWS. The cloud division is still only producing half the revenue Amazon gets from online retail, but it’s growing twice as fast (growth is still faster in the cloud divisions over at Alphabet and Microsoft.) As a result of the strong earnings, Amazon surged more than 12% in post-market trading.

The macro takeaway from Amazon’s earnings report today is that demand for cloud computing is very strong and capital spending on artificial intelligence has momentum which is likely to support mega cap tech stocks.

Amazon spent $89.9b in 2025, of which $34.2b was in the third quarter. It expects to spend $125b this year and boost that further in 2026. Most of that is going on support for AI cloud computing.

Those figures add to results from three other mega techs a day earlier to underscore the story that the AI race is spurring a relentless capex boom that’s a driver for the wider economy. This is a tide that’s rising rapidly and sustainably enough to lift pretty much all boats. At least for now.

On the other hand, Apple initially tumbled after it reported a slight beat on revenue and a miss on sales in greater China, but have since recovered to trade up more than 3%. China is the company’s third-largest market, but it’s volatile, so results in that region are often a driver of the top line. After beating expectations comfortably last quarter, this is a disappointment and it’s the China news that’s likely to dominate coverage.

Overall earnings per share were 4.3% above forecasts. Sales of iPads remain stalled. Wearables, which include Apple Watch and AirPods, did better than expected. But Apple’s strength is in iPhone sales, which came in below forecasts.

It’s worth noting though that the $1.9 billion miss on sales in China was more than offset, in absolute dollar terms, by the $2.3 billion beat on sales in Europe. That may be why the stock has recovered from the initial shock of the China results.

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