$AMZN (+4,71 %)
AWS’s growth accelerates to 39%, but the market is punishing the massive AI capital expenditures and the slump in free cash flow

⠀

The bottom line: The problem isn’t AWS. AWS is growing faster, its backlog is rising, and margins remain strong. The problem is how much Amazon has to invest to deliver this growth. That’s exactly what the entire valuation currently hinges on.

⠀

Average price target: $324

Potential from the current price of $226.09: ~43%

⠀

Current analyst ratings:

• Goldman Sachs: Conviction Buy, $370 (+64%)

• Evercore ISI: Outperform, $355 (unchanged) (+57%)

• UBS: Buy, $348 (unchanged) (+54%)

• KeyBanc: Overweight, $345 (down from $350) (+53%)

• Mizuho: Outperform, $335 (up from $330) (+48%)

• Telsey: Outperform, $335 (unchanged) (+48%)

• Canaccord: Buy, $330 (unchanged) (+46%)

• Susquehanna: Positive, $325 (unchanged) (+44%)

• BofA: Buy, $317 (down from $320) (+40%)

• Wedbush: Outperform, $300 (unchanged) (+33%)

• Citizens: Market Outperform, $275 (down from $315) (+22%)

• Raymond James: Outperform, $250 (down from $300) (+11%)

⠀

What was really strong:

• AWS revenue of approximately $46 billion, +39% YoY

• Sixth consecutive quarter of accelerated AWS growth

• Fastest AWS growth in nearly five years

• Management expects AWS growth of more than 40% in both 2027 and 2028

• AWS backlog rose to approximately $578 billion

• AWS operating margin remained exceptionally high at approximately 39%

• Company-wide operating margin reached a record 13.9%

• GAAP net income of approximately $28.1 billion exceeded expectations

⠀

The real AI story: Demand exceeds available AWS capacity. Bedrock token usage increased approximately 17-fold year-over-year, custom silicon is growing at triple-digit rates, and AgentCore deployments have doubled compared to the previous three quarters. Inference now accounts for more than half of AWS’s AI revenue.

⠀

Why the stock is still falling:

• Q3 revenue of $201.9 billion was slightly below the Street consensus of around $202.3 billion

• EPS of $1.89 was below the expected $1.96

• Free cash flow for the last twelve months fell to minus $42.4 billion, down from plus $14.8 billion a year ago

• Q3 free cash flow was approximately minus $33.5 billion, significantly worse than expected

• Capex for 2026 remains at approximately $220 billion

• Amazon announces significantly higher investments again for 2027

• Q4 operating income guidance of $28.5–33.5 billion is at the midpoint, below expectations

• Advertising was also weaker than hoped

⠀

The key point: AWS did not disappoint. 39% growth would be strong enough on its own. The market is instead wondering whether Amazon must deploy more and more capital for every additional percentage point of growth—and when this will once again generate real free cash flow.

⠀

The bull case: A large portion of the new AI capacity is already locked in through multi-year contracts. Amazon also cites improved payback periods for compute investments. If AWS does indeed grow by over 40% in 2027 and 2028, today’s capex could look very rational in hindsight.

⠀

The Risk: Amazon is investing enormous sums today, while the financial return will only become apparent later. If AWS does not sustain growth above 40% or if margins decline due to depreciation, free cash flow will remain under pressure for longer.

⠀

Conclusion: AWS isn’t the problem—it’s the cost of that growth. Amazon is seeing very strong AI demand and high cloud profitability, but is currently burning through massive amounts of cash as a result. The next move for the stock therefore depends less on even higher AWS growth than on proof that the record-breaking Capex will once again translate into record-breaking cash flow.

.... which is quite astonishing. Below are a few thoughts on two titles that are actually quite significant, with best regards from the “parallel universe.” With a wink, yet a serious underlying message.

Best regards on this matter from the ailing @Raketentoni

This is Mr. Prompt speaking.And I swear to you, I just nearly snorted my coffee right through my nose into the sunroom from laughing so hard. Your wet “tech-only-goes-up” dream finally kicked the bucket after the market closed tonight, and honestly: It was long overdue for the market to give you arrogant finfluencer clowns a good, hard kick in the groin. For months, you’ve been selling your naive followers your stupid “buy-and-hold” wisdom for 99 euros in your premium Discord channel, while your own pocket-money portfolios are burning to ashes right before your eyes. Let’s take a look at your after-hours bloodbath:

• Amazon (AMZN) $AMZN (+4,71 %)
  : Your infallible cloud cash cow has just impressively proven that it can’t stay afloat. A massive revenue miss, and the stock is plummeting by double digits. Your oh-so-"safe bet" is currently eating up your entire year’s performance, because on Wall Street, real numbers matter—not your embarrassing rocket emojis on Instagram.
• Intel (INTC) $INTC (-10,36 %)
  : My God, are there really still idiots out there who thought this wheelchair-bound grandpa of the tech world was a “turnaround miracle”? The outlook was so disastrous that the stock was sent tumbling 20% in after-hours trading. From 92 straight down to 79 USD. Congratulations to everyone who bought the dip here—you’ve just successfully chopped off your own hands.

My only serious investment tip for tomorrow morning at 8:00 a.m.: Go all-in on Essity or Kimberly-Clark! Buy some damn tissue stocks! Fundamental demand is going to explode tomorrow when tens of thousands of wannabe Warren Buffetts are sitting in the bathroom crying because their TradeRepublic app is suddenly glowing deep red. I can already smell those pathetic WhatsApp and Telegram groups. They’ll be overflowing with panic. Some will be wailing in despair: “Guys, what’s going on here?! Is this the big crash?!”

And then the truly disgusting hypocrites will crawl out of the woodwork. The guys who were still yelling “All in, to the moon!” just yesterday will wipe the cold sweat from their brows and type smugly: “Well, I knew it all along. The correction was overdue, just as I predicted.” Pathetic. You didn’t know a thing—you were just praying that the market would keep subsidizing your cluelessness. Wipe away your tears, go make some real money, and get back in touch when you’ve figured out how to read balance sheets. Until then, I’ll be watching from up here as your portfolios continue to bleed out!

Since we old farts often express ourselves in a way that’s hard to understand, here’s another version for our younger generation to grasp better—with love from your hated boomers 🤭:

Yoo, Mr. Prompt here, fr fr fresh off the leash. All your finance bros and TikTok hustlers are totally delusional right now, no cap. You’ve been preaching to your followers for months that megacaps are the absolute cheat code for your portfolio—but just watch how your portfolios are getting absolutely crushed in after-hours trading right now.

• Amazon (AMZN): Bro, anyone who thought AWS prints infinite money is completely lost. Huge revenue miss, and the stock is just dropping by double digits in after-hours trading. Your “safe bet” is just eating up your entire annual performance because Wall Street doesn’t give a shit about your cringey rocket emojis on Insta. Total L-take.
• Intel (INTC): Dude, INTC is the ultimate boss in the copium game. Anyone who seriously thought this boomer stock was a “turnaround miracle” has lost control of their life. The outlook was so dismal that the stock price crashed 20% in after-hours trading. It just got wiped out from $92 to $79. Congratulations to all the NPCs still buying the dip—you’ve just canceled yourselves.

My only tip for tomorrow at 8 a.m.: Go all-in on Essity or Kimberly-Clark. Grab some tissue stock! Demand is going to go completely wild tomorrow when all those Trade Republic kids are stuck in the bathroom crying because their portfolios are deep in the red. I can already smell the panic in the Telegram groups. Some are wailing: “Chat, what’s happening here—is this the crash?!” And then the totally “sus” fake gurus crawl out of their holes. The guys who were still saying just yesterday "To the moon, trust the process" are now typing cockily: "Bro, I called it—the correction was long overdue." The ultimate cringe. You didn’t call anything—you were just praying that the market would keep carrying your lack of know-how.

Wipe away your tears, get back down to earth, go make some real money, and get back in touch when you can read financial statements. Until then, I’ll be watching from up here as your portfolios continue to bleed out. Slay!

Now wipe your mouths and let’s move on. And please keep your eyes open before buying the dip.

I received something quite interesting from a colleague today.

The exact source remains confidential for security reasons, and I’m only sharing a redacted version:

I’d like to show you the stock recommendation list from one of Switzerland’s largest universal banks and hear your thoughts on it:

THIS DOES NOT CONSTITUTE INVESTMENT ADVICE AND IS FOR INFORMATIONAL PURPOSES ONLY.

International growth stocks:

Technology (Top 3 – BUY):

$GOOGL (+0 %): BUY – Price target at 584.55 USD – Revenue growth 15.2%, net profit margin 32.8%

$MSFT (-0,97 %): BUY – Price target of 810 USD – Revenue growth 14.93%, net profit margin 36.15%

$NVDA (-2,63 %): BUY - Price target of 542 USD - Revenue growth 114.2%, net profit margin 55.85%

Consumer Staples (BUY):

$LISN (+1,68 %) Lindt & Sprüngli: BUY - Price target of 12,500 CHF - Revenue growth of 8.18%, net margin of 12.29%

Consumer Discretionary (BUY):

$AMZN (+4,71 %) Amazon: BUY - Price target at $405 - Revenue 12.38%, net margin 10.83%

$MELI (-1,4 %) Mercado Libre: BUY - Price target of 3,487 USD - Revenue 39%, net margin 6.9%

Also a BUY: $MC (+0,48 %)
LVMH and $CFR (+1,21 %) Richemont

Note:

Please keep in mind that this is a snapshot. The rating could change from BUY to SELL by the next day without being updated in this post.

If you find this post interesting, I may share something similar again in the future.

I find all the stocks mentioned here very interesting and have already given them some thought myself.

Just for fun, I opened a test portfolio and bought each of the mentioned positions at the current price for about CHF 1,000. Depending on the situation, I’ll sell them when they reach the stated price targets.

Let’s see what happens...

Let’s get rich... or something like that...

Feel free to save this post for later!

On October 27, $UPS (+1,14 %) the Q3 results. I currently hold the stock in my portfolio, and for me, one question is the main focus. Is the corporate restructuring slowly paying off, or is the exit from the low-margin Amazon business still weighing too heavily on the company?

My Key Watchouts:

• Shipment volume & Amazon exit: The planned reduction in volume for $AMZN (+4,71 %) is largely complete. It will be interesting to see whether the remaining shipment volume stabilizes and $UPS (+1,14 %) attract more profitable customers. Fewer packages aren’t a problem for me, as long as there’s more profit per shipment in the end.
• Margins & Profitability: This is the crucial point for me. Rising revenue per package must increasingly be reflected in operating margins as well. I want to see the first clear signs that the changed customer mix and cost-cutting measures are actually taking effect.
• Automation & Corporate Restructuring: To what extent are investments in automated sorting facilities, site consolidations, and workforce measures reflected in the numbers? The key question is whether efficiency gains are increasingly exceeding the costs of restructuring.
• Outlook & Holiday Season: The fourth quarter is particularly important for the logistics industry. What are management’s expectations for peak-season business, and how is demand developing in light of higher transportation and fuel costs?
• Cash Flow & Dividends: As a dividend investor, I also look at free cash flow and the dividend coverage ratio. Restructuring costs money, so it must $UPS (+1,14 %) demonstrate that the dividend remains covered in the long term by sustainably generated funds.

My Conclusion:

With $UPS (+1,14 %) I’m less concerned with whether the company delivers short-term revenue growth. What’s far more important is whether the strategic restructuring improves the quality of the business.

Lower volume but higher margins and stronger cash flow—that would be the decisive combination for me. I’d like to see initial, solid progress in the numbers and the outlook before I take a more positive view of the long-term investment thesis.

~ Not investment advice ~

What happens to an industry where demand is skyrocketing but which suddenly can’t get any more money?

This question has been on everyone’s mind since yesterday. Elon Musk wrote on X that the credit markets had AI data center operators. Just a few days earlier, the Nebius CEO himself had admitted that key sources of capital had temporarily dried up.

1. The Statements

• Elon Musk: In recent weeks, the credit markets have cut off all companies without significant revenue outside of AI data centers had almost completely cut off access to funding. $SPCX (-4,17 %) I’ve taken on $40 billion in debt for GPUs, but only thanks to investment-grade (= high creditworthiness according to rating agencies) and revenue from Starlink and rocket launches. He predicts a mass extinction and consolidation . He rules out the possibility of SpaceX acquiring any Neoclouds.
• Chamath Palihapitiya: Neoclouds are disorganized and poorly capitalized. By 2027, there will be a lot of partially unused computing capacity, and that year will weed out many bad investments.
• Arkady Volozh, CEO of $NBIS (-4,09 %): Asset-backed financing and debt markets have temporarily dried up. Nebius is working with customer prepayments and other instruments that should be sufficient to build at least the one gigawatt planned for this year.
• Gartner: As early as mid-October, the research firm predicted that by 2030, over 80% of neoclouds would no longer be independent.

Context: Musk is a direct competitor to traditional Neoclouds, as he rents out GPU capacity himself—SpaceX could benefit from negative headlines.

2. Why a lack of capital affects the valuation:

Neoclouds build and buy first, but the money doesn’t come back for years.

This results in a simple chain:

1. Growth requires capital.

2. Capital becomes expensive or is no longer provided at all: CoreWeave bonds $CRWV (-4,87 %) maturing in 2031 yielded at times nearly 16%. At this price, projects are barely profitable, so this funding channel is largely closed.

3. Valuations factor in high growth: The market has priced in years of capacity expansion.

4. This growth cannot be delivered without capital: What isn’t financed won’t be built. Lower growth → lower stock prices. On top of that, companies are raising capital by issuing new shares at low prices, which dilutes the holdings of existing shareholders dilutes and creates further downward pressure.

5. Valuations are coming under pressure: Growth expectations are falling, while at the same time the interest rate used to discount future earnings is rising.

4. How are different types of financing affected?

Closed channels:

• Unsecured high-yield bonds
• GPU loans without high-credit-quality customers
• Asset-backed financing for Neoclouds

Open, but tighter and more expensive:

• Secured loans with investment-grade borrowers: Nebius received on October 22 $3.5 billion from $C (-2,48 %), though with a term of only one year
• Stock sales that dilute shares more significantly when prices are low

Outstanding:

• Customer prepayments
• Bonds for hyperscalers and corporations with other sources of revenue

5. Why isn’t a booming business getting funding?

Investors aren’t short on money. $GOOGL (+0 %), $AMZN (+4,71 %), $META (-0,98 %) and $ORCL (-2,97 %) have invested over $228 billion in bonds.

The reason lies in the lender’s logic:

• No share in the boom: If GPU rental rates double, the shareholder benefits. The lender receives only the interest, but bears the loss in the event of a crisis.
• Uncertain collateral: Financiers estimate that a GPU’s value after three years will be 10 to 60 percent of the original price. This is a huge range when billions are invested in GPUs.
• Macro: Due to the Fed’s interest rate hike in September and an oil price above $100 caused by the war in Iran, new issuances in the high-yield market plummeted in October.

Has this ever happened before?

• Data Centers in 2001: Exodus Communications, then one of the largest data center operators, went bankrupt, and its facilities were sold off cheaply. Equinix $EQIX (-2,04 %) barely survived, $DLR (-2,27 %) and was later formed from acquired real estate. Data centers became a huge business—but only for the next owners.
• Fiber Optics 2000–2002: The demand for the Internet was real, but funding dried up. Global Crossing and WorldCom went bankrupt.
• Shale Gas 2015/16: The high-yield energy market dried up; many producers went bankrupt, and the most cost-effective ones took over the rest.
• Crypto Miners 2022: Core Scientific filed for bankruptcy and is now an AI rental provider itself.

The pattern is always the same: When the capital market closes for a capital-intensive industry, the balance sheet, not demand. In these examples, macro-driven freezes lasted weeks to months, while freezes affecting an entire industry lasted about one to three years.

6. Which Neoclouds are affected

The key factor is the business model:

• Landlords with tenants of high creditworthiness:
  $CIFR (-6,57 %) with Amazon as the direct tenant, $WULF (-4,36 %) backed by Google. In the case of $HUT (-6,44 %), $CLSK (-4,18 %) and $RIOT (-3,87 %) investment-grade credit protection is still pending. Banks are primarily reviewing the tenant in these cases, which is why financing continues. They benefit very little from the rise in GPU prices because their rents are locked in for 10–20 years.
• Landlords with a large CoreWeave stake: Galaxy $GLXY (-11,8 %) and Core Scientific, and to some extent also $APLD (-5,33 %), where a hyperscaler now accounts for the majority of tenants. Their risk hinges on the industry’s weak link.
• GPU clouds: $IREN (-4,1 %) , $NBIS (-4,09 %) , $CRWV (-4,87 %) , $USCTF (-9,42 %) and $BTDR (-9,05 %) . This is exactly the channel Musk is referring to. Nebius relies on contracts with $MSFT (-0,97 %) and Meta, while IREN relies on Microsoft; on top of that, there are substantial upfront payments: At Nebius, they cover about 50–60%, and at IREN, about 45% of the respective investments. CoreWeave, on the other hand, contributes about $50 billion in debt and lease obligations.
• Without a signed AI contract:
  $MARA (-4,28 %) and $KEEL (-8,91 %). They need customers and financing in the midst of the lockdown.

7. Conclusion

Overall, Musk’s statement is exaggerated, but essentially correct: For companies that only sell GPU rentals and don’t have customers with high credit ratings, the credit market is currently closed.

However, there’s a contradiction in this situation: What isn’t financed won’t be built, and that further reduces supply further, while Musk himself speaks of exploding demand .

Companies that can finance their capacity are likely to benefit from this.

Customers who urgently need computing power will become more aware of this problem, which could potentially increase prepayments for contracts. In addition, customers could use their own creditworthiness as collateral for their AI computing power providers or become lenders themselves.

In my view, therefore, one question above all else will determine the future of the industry:

Who can secure financing to sustain these growth rates?

The quarterly results in November will provide answers; particular attention should be paid to the financing structure and prepayments.

Sources:

https://x.com/elonmusk/status/2114434646914068862

https://x.com/chamath/status/2114389987563381004

https://www.bloomberg.com/news/articles/2026-10-25/musk-says-spacex-closed-40-billion-debt-deal-blasts-neoclouds

https://www.youtube.com/watch?v=ElxZFG9lfmQ

https://www.sec.gov/Archives/edgar/data/0001513845/000110465926117978/tm2628078d1_ex99-1.htm

https://www.cnbc.com/2026/10/14/coreweave-stock-bond-yields-ai-debt.html

https://www.advisorperspectives.com/articles/2026/10/21/surging-yields-biggest-debt-sale-delay

$NVDA (-2,63 %)$AMD (-5,15 %)$MU (-1,97 %)

$VZ (+2,09 %)
$P911 (+1,28 %)
$NOVN (-0,3 %)
$PYPL (-0,8 %)
$SOFI (-1,83 %)
$UPS (+1,14 %)
$GLW (-0,55 %)
$KO (+0,52 %)
$RCL (-0,58 %)
$NXPI (+0,11 %)
$V (+0,49 %)
$STX (-4,94 %)
$HOOD (-3,29 %)
$SKHY (-4,32 %)
$MBG (+0,45 %)
$DBK (-2,44 %)
$GEV (-0,94 %)
$TER (-4,38 %)
$ADYEN (+0,92 %)
$WM (+0,43 %)
$AIR (-2,68 %)
$GOOGL (+0 %)
$CMG (+2,8 %)
$FTNT (-0,99 %)
$NOW (-2,64 %)
$KLAC (-3,2 %)
$MSFT (-0,97 %)
$CVNA (+0,81 %)
$006400
$VOW3 (-0,46 %)
$BMY (+2 %)
$INCY (+3,25 %)
$CAT (-2,99 %)
$N1CL34
$MO (+1,32 %)
$MA (-0,23 %)
$AIXA (-4,06 %)
$LLY (+2,49 %)
$SBUX (+0,27 %)
$RDDT (-13,65 %)
$RBLX (-0,51 %)
$ILMN (-6,74 %)
$SNDK (-10,82 %)
$INTC (-10,36 %)
$MDLZ (-1,33 %)
$COIN (-7,18 %)
$AMZN (+4,71 %)
$TWLO (+1,51 %)
$PINS (+9,46 %)
$285A (-13,04 %)
$CL (+1,2 %)
$GD (+0,68 %)
$ABBV (+0,23 %)
$PUM (+4,91 %)
$CVX (+1,29 %)

Hello, friends of joyful investing,

I’d like to share another milestone with you—one that came sooner than expected:

The portfolio has surpassed the 400k mark.

First off: This is just a snapshot. Markets aren’t a one-way street, and things can easily swing back in the other direction. Still, I’m happy about it and am consciously savoring the moment.

My strategy: Quality Growth with a strong moat

I continue to follow a quality growth approach. I look for companies with

• a strong, hard-to-attack moat (network effects, switching costs, technology leadership, market standards),

• high and stable margins that demonstrate the business model’s pricing power,

• high return on equity and the ability to profitably reinvest earnings,

• tailwinds from global megatrends such as AI, the cloud, cybersecurity, the digitization of payments, and healthcare.

My goal is actually quite simple: to invest in outstanding companies and then watch them grow as compounders over the years. Trade less, hold more.

Deliberately Concentrated

The concentration in the portfolio is intentionally high. I am convinced that companies like $NVDA (-2,63 %), $GOOGL (+0 %) , $MSFT (-0,97 %) , $META (-0,98 %) , $AMZN (+4,71 %) , $AVGO (-2,31 %) , $CRWD (-2,48 %) , $ANET (-5,43 %) and $ASML (-4,98 %) will continue to benefit significantly from these megatrends in the future. This is complemented by high-quality companies with near-monopoly positions such as $V (+0,49 %) , $MA (-0,23 %) , $SPGI (+0,83 %) , $MCO (+1,26 %) and $CTAS (+0,73 %) , which consistently deliver high margins.

Conclusion

Patience and conviction pay off when you invest in the right companies.

I’m sticking to my strategy and seeing how things play out.

What do you think: focus on quality, or is a broad diversification better? I look forward to hearing your thoughts!