AMAZON, INTEL, REDDIT, COINBASE, SANDISK + MORE EARNINGS | MARKET CLOSE

SUMMARY

Amit Kukreja hosts a comprehensive analysis of a turbulent market close, focusing on earnings reports from Amazon, Intel, Reddit, Coinbase, SanDisk, and other major tech and growth companies. The discussion features detailed breakdowns of financial results, sector sentiment, and the broader implications for cloud, AI, and semiconductor industries amid widespread stock declines.

MAIN POINTS

• Panelists preview Amazon, Intel, Reddit, and SanDisk earnings, highlighting expectations for AWS demand and semiconductor sector performance. [2:00]
• Reddit's history of beating revenue guidance and its focus on user growth and cash-heavy balance sheet are discussed. [11:00]
• Amazon and Intel both miss on earnings and revenue, triggering sharp after-hours declines across tech and semiconductor stocks. [14:00]
• AWS posts 39% year-over-year growth, but market expectations for even higher growth rates weigh on Amazon's stock reaction. [20:01]
• Amazon's segment results show AWS revenue beat, but North American e-commerce and store sales come in slightly below consensus. [23:03]
• Reddit beats on revenue and EPS but misses on daily active users, raising concerns about user growth despite strong financials. [26:00]
• Intel's weak guidance for the next quarter and margin pressures spark fears of sequential revenue decline in the semiconductor sector. [28:00]
• Amazon's advertising revenue growth slows to 12% year-over-year, a significant drop from previous quarters, prompting questions about ad business resilience. [32:00]
• Amazon achieves a record 13.9% operating margin and projects the possibility of two trillion-dollar revenue businesses within the next decade. [34:01]
• Panelists analyze Intel's challenges in the consumer and data center markets, questioning whether AMD is gaining market share. [38:00]
• Broader tech sector sentiment remains negative as high capex and delayed profitability weigh on cloud and AI infrastructure stocks. [41:03]
• Rivian outperforms with strong delivery guidance and improved gross margins, while other EV and tech names struggle. [44:00]
• Reddit announces it will require users to log in for content access, aiming to boost user engagement but risking short-term traffic declines. [47:01]
• Panelists debate whether the market is punishing high capex or pricing in a future slowdown in AI and semiconductor spending. [53:00]
• Audience votes to focus on SanDisk and Reddit, with ongoing discussion about the implications of financial results and user growth strategies. [56:01]
• Sentiment around AI and semiconductor stocks is described as fearful, with concerns about a potential top in the AI investment cycle. [1:01:01]
• Private market valuations for AI startups like Instinct and Cognition are scrutinized, with skepticism about their sustainability compared to public market peers. [1:04:00]
• Twilio, despite strong earnings beats, falls sharply, exemplifying the market's harsh reaction to growth tech stocks. [1:09:00]
• Panelists discuss recent trades in Micron and the rationale for exposure to memory names amid sector volatility. [1:14:00]
• Amazon's earnings call begins, with CEO Andy Jassy outlining AWS's rapid growth, AI investments, and long-term cloud migration trends. [1:17:00]
• Amazon plans to offer its Tranium chips externally by late 2027, signaling confidence in custom silicon as a competitive advantage. [1:24:01]
• Prime Video is highlighted as a profitable, multi-billion dollar business, with strong content and live sports driving engagement. [1:32:00]
• Q&A with analysts addresses AWS growth drivers, capex plans, and the expected timeline for trillion-dollar revenue milestones. [1:41:01]
• Amazon's Bedrock AI service is positioned as a major growth opportunity, with customers demanding flexibility and security across multiple AI models. [1:59:01]
• Panelists conclude the Amazon call showed no structural issues, emphasizing AWS's projected 40% growth and the company's long-term prospects. [2:09:01]
• Reddit's user growth challenges and the importance of AI data licensing deals are debated as key catalysts for future performance. [2:17:00]
• Discussion centers on whether semiconductor bottleneck trades are sustainable investments or short-term trades, given recent price action and sentiment shifts. [2:27:01]
• Panelists reflect on the role of macro factors, midterm elections, and market sentiment in driving tech stock volatility and potential recovery scenarios. [2:36:02]
• News breaks that Nvidia may provide billions in credit support to a cloud provider's AI deal, raising questions about private capital's role in AI infrastructure funding. [3:01:01]
• Panelists question the effectiveness of previously announced $500 billion in AI infrastructure financing and discuss the implications of vendor financing in the sector. [3:12:03]

DETAILED ANALYSIS

The session opens with heightened anticipation for a series of critical earnings reports from Amazon, Intel, Reddit, SanDisk, and other major tech and growth companies. The panel, consisting of Amit Kukreja and guests, sets the stage by noting the market's negative sentiment, with Amazon and Intel already trading down ahead of their results and broader indices reflecting risk-off behavior. The discussion quickly pivots to Amazon, where expectations are high for AWS growth following bullish commentary from CEO Andy Jassy and strong cloud demand signals from Microsoft.

However, concerns linger about whether even robust results can overcome the market's current skepticism, especially after recent sell-offs in other big tech names like Google.

Reddit and SanDisk are also highlighted as focal points. Reddit's consistent track record of beating revenue guidance and maintaining a cash-heavy, low-capex profile is contrasted with its ongoing struggle to grow its U.S. user base, a key metric for monetization. SanDisk, meanwhile, is positioned as a bellwether for the memory trade, with panelists eager to see if it can buck the negative trend that has hit Micron and other semiconductor stocks.

As the earnings results come in, the market reacts sharply. Amazon misses on both EPS and revenue, with AWS growth slightly exceeding expectations but not enough to offset disappointment elsewhere. Intel delivers a mixed quarter, beating on EPS but missing on revenue and providing weak guidance for the next quarter, which triggers a steep after-hours decline of over 20%.

The panel notes the severity of these moves, particularly for companies of such scale, and draws parallels to the previous day's dramatic drop in Google shares. The conversation underscores the market's current intolerance for even minor misses, especially in high-expectation sectors like cloud and semiconductors.

Further analysis of Amazon's results reveals that while AWS posted impressive 39% year-over-year growth, the market had already priced in such performance, and the company's guidance for future quarters failed to inspire confidence. North American e-commerce and store sales also came in slightly below consensus, contributing to the negative reaction. Amazon's advertising revenue growth slows markedly to 12% year-over-year, down from 26% the previous quarter, raising concerns about the durability of its ad business.

Management attributes the slowdown to timing anomalies, including the shift of Prime Day and changes in search engine marketing, but assures that growth should return to the high teens in the fourth quarter.

Reddit's report is similarly mixed. The company beats on both revenue and EPS, with year-over-year revenue up 50% and EPS up 75%, but misses on daily active users (DAUs), which fall short of expectations for the second consecutive quarter. The panel debates whether the market is overreacting to the DAU miss, given the company's strong financials and international user growth, but acknowledges that U.S. user stagnation is a significant headwind due to higher monetization rates in that segment.

Reddit's decision to require users to log in to access content is seen as a risky but potentially necessary move to boost engagement and improve ad targeting, though it may hurt short-term traffic and user acquisition.

Intel's guidance for the next quarter is a major source of concern. The company projects a sequential revenue decline and lower gross margins, which is particularly troubling in the context of ongoing AI infrastructure buildouts and supposed CPU shortages. The panel notes that if Intel cannot demonstrate pricing power or margin improvement in this environment, it casts doubt on the broader semiconductor sector's ability to sustain current valuations.

The negative reaction spills over to other CPU and memory names, with AMD, ARM, and Micron all trading lower in sympathy.

The discussion broadens to consider the implications for the entire tech sector. High capex requirements, delayed profitability, and the market's apparent fatigue with the AI and cloud infrastructure trade are cited as reasons for the widespread sell-off. Even companies that deliver strong results, such as SanDisk and Rivian, struggle to hold gains, reflecting a market that is quick to punish perceived weaknesses and slow to reward strengths.

Amazon's earnings call provides additional color on the company's long-term strategy. CEO Andy Jassy emphasizes the durability of AWS's growth, projecting 40% annual growth in both 2027 and 2028 and reiterating the goal of building two trillion-dollar revenue businesses within the next decade. He highlights the company's investments in custom silicon (Graviton and Tranium), AI services like Bedrock, and the expansion of robotics and automation in fulfillment centers.

Jassy also addresses concerns about agentic shopping and the potential impact on Amazon's ad business, asserting that external agents have not yet meaningfully affected performance and that the company is well-positioned to adapt as the landscape evolves.

The Q&A session with analysts delves into the specifics of AWS's growth drivers, capex plans, and the anticipated returns on infrastructure investments. Management maintains that the current margin structure for AWS is sustainable, though they acknowledge that the rapid growth of AI services, which carry lower margins, will create some mix-related pressure. The company is focused on driving efficiency gains through custom chips and process improvements, and expects continued productivity enhancements from robotics and AI in its fulfillment network.

Panelists reflect on the broader market environment, noting that sentiment is being driven more by macro factors—such as midterm elections, bond yields, and geopolitical risks—than by company fundamentals. The disconnect between strong earnings and weak stock performance is attributed to a combination of risk aversion, profit-taking after a period of exuberant valuations, and uncertainty about the sustainability of the AI investment cycle. The conversation also touches on the inflated valuations of private AI startups, with skepticism about whether companies like Instinct and Cognition can justify their multi-billion dollar price tags when compared to established public market peers.

The role of vendor financing and private capital in supporting the next wave of AI infrastructure buildouts becomes a focal point late in the discussion. News breaks that Nvidia may provide billions in credit support to a cloud provider's AI deal with Anthropic, raising questions about why traditional private capital is not stepping in and whether the much-publicized $500 billion in AI infrastructure financing is materializing as expected. Panelists express concern about the sustainability of circular financing arrangements and the implications for sector stability.

Throughout the session, the panel maintains a nuanced view of the market's challenges and opportunities. While acknowledging the pain of recent declines and the difficulty of timing trades in high-beta sectors like semiconductors and cloud infrastructure, they emphasize the long-term strength of well-run companies like Amazon, Google, and Nvidia. The consensus is that, despite short-term volatility and sentiment-driven price action, the underlying fundamentals of the AI and cloud transformation remain intact, and that periods of market dislocation may present attractive entry points for patient investors.

However, they caution that not all trades are created equal, and that distinguishing between sustainable investments and speculative bets is more important than ever in the current environment.

LINKS

• Amit Kukreja's Twitter/X profile for market commentary and updates.
• Amit Kukreja's Substack for in-depth stock and market analysis.
• Free news terminal for real-time market news and financial data.

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