Alphabet reconfirms cloud growth... Tesla misses margin estimates
Alphabet reconfirms cloud growth... Tesla misses margin estimates [Wall Street Newsletter]
Speakers
Park Myung-seok
— Curator
Summary
Curator Park Myung-suk reviews after-market reactions to Alphabet and Tesla earnings, and broader market moves. Alphabet's strong cloud growth and capex increase drive a rotation into semiconductors, while Tesla's margin miss weighs on the stock. The briefing also covers AMD's big Anthropic deal, AI security incidents, rising oil prices, and the ongoing recalibration between hardware and software sectors.
- Alphabet beat on cloud growth (82%) but after-market dip on capex hike; curator remains bullish long-term.
- Semiconductor stocks rally on hyperscaler capex, with gains in Micron, Broadcom, Marvell, Lumentum, and others.
- Tesla misses margin estimates (16.8% vs 19.4% expected) despite record revenue, leading to after-market decline.
- AMD signs large-scale deal with Anthropic, including $5B investment, seen as a positive AI market share signal.
- Oil rises to $86 on Iran/Hormuz tensions, but inventory build caps upside; macro headwinds persist.
- OpenAI's autonomous agent incident lifts cybersecurity names like Palo Alto Networks; security theme remains in focus.
- Market rotation message: hardware favored over software as capex reality sets in, though selective software like ServiceNow holds up.
- United Rentals, GE Vernova, and other industrial/rental plays show data center construction driven demand.
Ideas
AI capex keeps fueling semiconductor rally.
Alphabet's announcement of higher AI capex directly benefits semiconductors. The market rotated sharply into hardware after the guidance, with stocks like Micron, Sandisk, Marvell, Intel, Broadcom, Lumentum, and Corning rallying. This reinforces that hyperscaler spending continues to drive semiconductor demand, and the earlier worries about the semiconductor cycle are premature.
Alphabet's long-term AI value remains intact.
Alphabet delivered outstanding cloud growth of 82%, strong AI momentum, and solid overall earnings. Despite the after-market dip caused by increased capex guidance, the company has ample free cash flow and a proven ability to monetize AI. The speaker views Alphabet as the most attractive among big tech, with a multi-year investment horizon, and expects the stock to recover once analysts and the conference call reinforce the quality of the results.
AMD's Anthropic deal marks AI share shift.
AMD sealed a massive deal with Anthropic, including a $5 billion investment from AMD and a commitment by Anthropic to purchase AMD chips and full racks. This not only secures a marquee AI customer but also signals that the market desires a viable alternative to NVIDIA. AMD's recent sales growth acceleration and the stock's outperformance over NVIDIA reflect this emerging paradigm shift.
