Amazon $180B Sales, Microsoft $35B AI Spend, Apple $102B

The technology sector is seeing significant investment and growth driven by artificial intelligence. Amazon reported strong third-quarter results, with sales reaching $180.2 billion, a 13% increase year-over-year. Its cloud division, AWS, grew 20% to $33 billion, its fastest pace since 2022, with CEO Andy Jassy attributing improvements to AI initiatives and increased infrastructure capacity. Amazon's investment in AI startup Anthropic resulted in a $9.5 billion paper gain, and the company spent $35.1 billion on property and equipment, a 55% increase, to support AI demand. Meanwhile, Microsoft is making record capital expenditures, with $35 billion spent, a 74% increase, on data centers and AI infrastructure, though it anticipates capacity constraints through the fiscal year. Apple is expected to report fiscal fourth-quarter revenue surpassing $100 billion, with iPhone sales projected to grow 8% and services revenue up 13%, though AI initiatives may not be heavily detailed in the upcoming report. Broadcom's stock hit a record high, fueled by its AI hardware, including chips crucial for AI infrastructure, and its growing software division, which reached $6.8 billion in revenue. Nvidia's valuation soared to $5 trillion, driving interest in AI-themed ETFs and highlighting sustained demand for AI chips, with SK Hynix reporting its 2026 memory output already sold out. Reddit is also poised to benefit from AI, with analysts raising its price target to $190 due to its potential in AI and advertising, anticipating revenue of $290.7 million and exploring deals with AI companies for user-generated content. In cybersecurity, SentinelOne's AI-powered platform is gaining traction, with a raised fiscal 2026 revenue forecast to $1 billion and a 22% year-over-year revenue increase in its second quarter. Conversely, Meta's stock dropped over 11% due to concerns about its substantial AI spending, despite exceeding revenue estimates, with CEO Mark Zuckerberg emphasizing the necessity of heavy investment to remain competitive.

Key Takeaways

• Amazon reported $180.2 billion in global sales for Q3, with AWS growing 20% to $33 billion, driven by AI demand and infrastructure investment.
• Amazon's investment in Anthropic yielded a $9.5 billion paper gain, and the company increased capital spending by 55% to $35.1 billion for AI infrastructure.
• Microsoft's capital spending reached a record $35 billion, a 74% increase, to support AI demand, though capacity constraints are expected.
• Apple is projected to surpass $400 billion in fiscal-year revenue for the first time, with Q4 revenue expected around $102.2 billion and iPhone sales up 8%.
• Broadcom's stock hit a record high, boosted by its AI hardware, including chips for AI infrastructure, and its software division revenue of $6.8 billion.
• Nvidia reached a $5 trillion valuation, driving significant interest in AI ETFs, with SK Hynix reporting its 2026 memory output is sold out.
• Reddit's price target was raised to $190 by Bernstein, citing AI and advertising potential, with Q3 revenue expected at $290.7 million.
• SentinelOne raised its fiscal 2026 revenue forecast to $1 billion, driven by its AI cybersecurity platform and a 22% Q2 revenue increase.
• Meta's stock fell over 11% due to investor concerns about its significant AI spending, despite exceeding revenue estimates.
• Analysts view Amazon as an undervalued AI stock pick, highlighting its key role in the AI sector.

Amazon's cloud and AI boost sales past $180 billion

Amazon reported strong third-quarter results with global sales reaching $180.2 billion, a 13% increase year-over-year. The company's cloud division, Amazon Web Services (AWS), saw a 20% growth to $33 billion, its fastest pace since 2022. CEO Andy Jassy highlighted significant improvements driven by AI across the business and increased capacity for AI infrastructure. Amazon also expanded same-day delivery access to more rural areas. The company's stock rose 14% following the positive earnings report.

Amazon's AI focus drives strong Q3 results and growth

Amazon announced strong third-quarter results, with North America sales up 11% to $160.3 billion and international sales up 14% to $40.9 billion. CEO Andy Jassy credited AI initiatives for significant business improvements and strong demand in AI infrastructure. AWS growth reached its fastest rate since 2022. The company also expanded same-day delivery services and saw increased use of its AI assistant, Rufus, with 60% of shoppers using it more likely to complete a purchase. Amazon projects fourth-quarter sales between $206 billion and $213 billion.

Amazon's AI investment in Anthropic yields $9.5B paper gain

Amazon's third-quarter profit increased by 38% to $21.2 billion, partly due to a $9.5 billion paper gain from its investment in AI startup Anthropic. This gain was an accounting adjustment, not a cash transaction. The company is heavily investing in AI infrastructure, spending $35.1 billion on property and equipment, a 55% increase from the previous year. CEO Andy Jassy stated Amazon is aggressively investing in capacity due to high demand, with AWS sales rising 20% to $33 billion, though operating income grew only 9.6% due to these investments. Free cash flow decreased to $14.8 billion.

Bernstein raises Reddit price target to $190 on AI and ad potential

Bernstein analyst Mark Shmulik increased Reddit's price target to $190, maintaining a Market Perform rating. Shmulik views Reddit as a crucial stock in the digital ad market, highlighting its potential through artificial intelligence and user-generated content. The analyst believes Reddit's diverse communities and engaged users make it attractive for advertisers. The increased target reflects greater confidence in Reddit's growth and its ability to capture more of the digital advertising market. This aligns with a trend of investor interest in social media platforms using AI and user content for advertising.

Reddit earnings focus on user growth and AI deals

Reddit is set to report its third-quarter earnings, with investors watching user growth, advertising revenue, and the impact of AI deals. Analysts expect average revenue of $290.7 million, a year-over-year increase. The company is exploring new revenue streams, including deals with AI companies using its user-generated content for model training. User engagement metrics like daily and monthly active users will also be key. Reddit's stock has shown volatility since its IPO, making this earnings report a significant factor for its future performance.

Apple earnings preview: iPhone sales, AI, and holiday outlook

Apple is expected to report its fiscal fourth-quarter earnings with analysts forecasting $1.78 earnings per share on $102.2 billion in revenue. Investors are watching iPhone sales closely, with an expected 8% growth, and Mac sales projected to increase by 11%. Services revenue, which has a higher profit margin, is predicted to grow 13%. Apple's fiscal fourth quarter includes the back-to-school period and a few days of new iPhone 17 sales. The company may not heavily emphasize its Apple Intelligence AI initiatives in the report, but fiscal-year revenue is expected to surpass $400 billion for the first time.

Microsoft's record spending shows AI's physical limits

Microsoft reported a record $35 billion in capital spending, a 74% increase year-over-year, primarily for data centers and infrastructure to meet AI demand. The company warned it will remain capacity-constrained through the end of the fiscal year, highlighting physical limitations like power and land permits as bottlenecks. Despite high spending, Microsoft's commercial remaining performance obligation reached $392 billion, indicating strong future demand. While AI investments are compressing margins, analysts see this massive infrastructure buildout as essential for market leadership.

SentinelOne: Wall Street sees undervalued AI cybersecurity stock

SentinelOne's Singularity platform uses AI to defend against cybersecurity threats at high speed, with features like autonomous threat neutralization and one-click rollback. The company recently raised its fiscal 2026 revenue forecast to $1 billion, driven by a 22% year-over-year revenue increase in the second quarter. SentinelOne also launched a new subscription option called Flex to improve customer flexibility. Analysts have a majority buy rating on the stock, with an average price target suggesting a 34% potential gain, noting its faster growth compared to competitors like CrowdStrike and Palo Alto Networks.

Broadcom hits record high fueled by AI and software growth

Broadcom reached a new record high, driven by strong investor confidence in its role within the AI boom and its growing software division. The company's hardware, particularly its Jericho3-AI chip, is crucial for AI infrastructure, with significant partnerships including Google. Broadcom's software revenue, boosted by the VMware acquisition, reached $6.8 billion, up 17% year-over-year, adding stability to its valuation. Analysts maintain a Strong Buy consensus, citing Broadcom's consistent performance in the technology sector.

Analyst names Amazon undervalued AI stock pick

Bill Baruch, Founder and President of Blue Line Capital, identified Amazon as one of the top undervalued stocks to own in the artificial intelligence space. He highlighted Amazon as a key player in the AI sector, suggesting its current valuation makes it an attractive investment. Baruch's comments were made during a recent CNBC program where he discussed trending stocks and AI valuations.

Nvidia's $5T milestone boosts AI ETFs

Nvidia's achievement of a $5 trillion valuation is driving significant investor interest in semiconductor and AI-themed Exchange Traded Funds (ETFs). Funds like the VanEck Semiconductor ETF (SMH) and iShares Semiconductor ETF (SOXX) are seeing increased activity. Nvidia's growth is fueled by major AI deals and high chip demand, including collaborations with the U.S. Department of Energy for AI supercomputers. The strong demand is also evident with SK Hynix reporting its 2026 memory output is already sold out, indicating a sustained AI-driven chip boom.

Meta stock drops on massive AI spending concerns

Meta's stock fell over 11% after the company revealed significant spending on artificial intelligence initiatives, despite exceeding revenue estimates. Investors are reportedly concerned about the company's ability to achieve a return on its ballooning AI expenditures. Competitors like Alphabet and Microsoft are also making substantial AI investments. CEO Mark Zuckerberg expressed confidence in the investments, stating it's crucial to invest heavily now to avoid falling behind in the rapidly evolving AI industry. Meta has also been hiring extensively and invested over $14 billion in AI startup Scale AI.

Sources

• Amazon surges on AWS growth
• Amazon credits AI initiatives for strong Q3 results
• Amazon’s Anthropic investment boosts its quarterly profits by $9.5B
• Bernstein Raises Reddit (RDDT) PT to $190, Cites Digital Ad Space, AI’s Role
• Reddit set to report Q3 earnings with user growth, AI deals in focus
• Apple Earnings Today: Fourth-Quarter Forecasts; iPhone Sales, AI, and What Else to Watch; CEO Tim Cook to Speak
• Microsoft’s record capex shows AI is hitting real-world limits
• 1 No-Brainer Artificial Intelligence (AI) Stock Down 76% to Buy Hand Over Fist, According to Wall Street
• Broadcom Hits Record High as AI Boom Drives Investor Confidence
• Analyst Says Amazon(AMZN) Among the Best Undervalued AI Stocks to Buy
• Nvidia’s $5 Trillion Milestone Turns These AI ETFs Into Hot Trades - VanEck Semiconductor ETF (NASDAQ:SMH)
• Meta Stock Plummets as Investors Horrified at How Much Zuckerberg Is Spending on Misfired AI