This video provides an in-depth analysis of the latest quarterly earnings reports for Microsoft, Meta, and Amazon. The host details Microsoft's "incredible" quarter, driven by the phenomenal and accelerating growth of its Azure cloud division, though he views the stock's valuation as expensive. He calls Meta's report the "most impressive" of the season, citing blowout revenue and earnings growth, but highlights management's warnings of future revenue deceleration and significant expense increases that will pressure margins.
The analysis of Amazon's report is framed as "decent, but with red flags" that disappointed the market. The primary concern is Amazon Web Services (AWS) lagging its competitors in growth and failing to accelerate. However, the host praises Amazon's massive capital expenditures and lack of buybacks as a strategic advantage and notes the standout performance of its advertising business. Ultimately, the creator explains that despite the strong results, he is not buying these stocks, as he believes more compelling, undervalued opportunities with greater upside potential currently exist in the small and mid-cap international stock space.
Analysis of Big Tech Earnings: Microsoft, Meta, and Amazon
00:44 Microsoft's Stellar Quarter: Microsoft reported an "incredible" quarter, with the stock hitting brand new all-time highs as a result of strong performance across the board.
01:11 Azure's Unbelievable Growth: The key driver was Microsoft Azure, which surpassed $75 billion in annual revenue and grew at a stunning 34% year-over-year. The growth rate for this massive division is also accelerating.
02:50 Broad-Based Strength: All of Microsoft's business segments reported growth, with most achieving double-digit increases, demonstrating the overall health of the company.
05:23 Powerful Future Guidance: Microsoft projects its strong growth will continue, guiding for Azure's revenue growth to accelerate further to approximately 37% in the next quarter.
08:54 Valuation Concerns: Despite the blowout performance, the creator believes the stock is expensive, trading at a price-to-operating cash flow multiple of 29, near its historical high, and is therefore not a buyer.
10:01 Meta's "Most Impressive" Earnings: In the creator's opinion, Meta delivered the most impressive results of the earnings season, with revenue up 22% and earnings per share up 38%, causing the stock to jump to all-time highs.
11:38 Key Growth Drivers for Meta: This growth was fueled by a dual tailwind: an 11% increase in ad impressions and a 9% increase in the average price per ad.
11:58 Warnings of Future Headwinds: Management explicitly warned investors to expect revenue growth to decelerate and for expenses to grow faster than revenue for the rest of 2025 and accelerate even more in 2026, which will likely compress profit margins.
14:44 Aggressive Spending: Meta is spending heavily on capital expenditures (doubling year-over-year) and is buying back more shares than it generates in free cash flow, dipping into its cash reserves to do so.
21:58 Amazon's Mixed Report & Market Disappointment: Amazon's earnings were met with a negative market reaction (stock down 8%) due to significant "red flags," primarily concerning its cloud division.
22:23 The AWS Problem: The main issue is that Amazon Web Services (AWS) revenue grew by only 17.5%, roughly half the rate of Microsoft's Azure. Crucially, unlike its competitors, AWS's growth is not accelerating.
27:25 A Strategic Advantage in Reinvestment: The creator highlights that Amazon is plowing the most money into capital expenditures of any hyperscaler and is not spending any money on dividends or buybacks, which he views as a competitive advantage to capture future demand.
30:41 Advertising a Bright Spot: Amazon's advertising services business was a standout success, growing 23% year-over-year, outpacing the advertising growth of both Meta (21%) and Google (10%).
34:32 Strong AWS Backlog: A positive detail often missed is that AWS's backlog of future commitments grew 25% year-over-year to $195 billion, suggesting strong revenue potential once it builds out the capacity to meet this demand.
19:55 The Overall Investment Thesis: The creator explains he isn't buying any of these tech giants because he is finding what he believes are better opportunities in small and mid-cap international stocks, which he sees as significantly cheaper and offering more upside potential than the "crowded" US mega-cap space.