Luria Sees Good Signs Ahead for Big Tech After Earnings
Speakers
Gil Luria
— Technology Strategist at D.A. Davidson
Summary
Gil Luria from DA Davidson reviews Big Tech earnings from Amazon, Microsoft, Meta, and Google. He is bullish on Amazon, Microsoft, and Google due to accelerating cloud growth and AI demand, but bearish on Meta for its heavy internal-use CapEx and weak frontier model. He also discusses AI demand strength and supply-side bottlenecks.
- Amazon, Microsoft, and Google cloud businesses exceeded expectations and are accelerating.
- Meta's CapEx increase was poorly received because it is for internal use, not external sales.
- Meta's frontier AI model is not competitive with peers like OpenAI, Anthropic, and Google.
- AI demand is extremely strong, with companies like Anthropic compute-constrained.
- Supply-side bottlenecks in CPUs, memory, packaging, and optics may limit data center buildout.
- Meta's advertising business remains strong, but high CapEx threatens margins.
- Investors reacted negatively to Meta's after-hours stock despite revenue growth.
Trade Ideas
Cloud accelerating, AI demand strong, buy.
The three major hyperscalers—Amazon, Microsoft, and Google—all reported cloud business acceleration above expectations, driven by strong AI demand. This is a very positive sign for their earnings and stock performance.
Meta CapEx internal use, model weak.
Meta's massive CapEx is solely for internal use, unlike peers who sell capacity externally. Its frontier model is not top-tier, and investors are punishing the stock. Meta must either cut CapEx, start selling capacity, or deliver a competitive model to avoid margin degradation.
