Zhao Yin Guo Ji·2025-11-05 07:31Investment Rating - The report maintains a "Buy" rating for Microsoft (MSFT US), Amazon (AMZN US), Google (GOOG US), and Meta (META US) [7][12][13] Core Insights - Strong demand and easing supply constraints are driving accelerated revenue growth for cloud service providers, with a combined revenue growth rate of 25.7% year-on-year in Q3 2025 [6][21] - Capital expenditures (Capex) for cloud companies increased significantly to $93.1 billion, reflecting a 71% year-on-year growth, indicating robust investment to meet demand [6][9] - AI investments are impacting profit margins differently across sectors, with cloud-related Capex showing better-than-expected results, while advertising sectors may face longer return cycles [6][16] Summary by Sections Q3 2025 Performance - The revenue growth for major U.S. internet companies in Q3 2025 showed an increase to 25.7% year-on-year, up from 23.1% in Q2 2025 [6][21] - Cloud service providers' operating profit grew by 24.1% year-on-year, indicating strong profitability despite increased Capex [6][9] AI Commercialization Progress - AI is driving rapid revenue growth in cloud computing and advertising sectors, with significant advancements in AI cloud infrastructure [16][17] - The return on investment for AI in advertising is slower compared to cloud services, leading to short-term profit margin pressures for companies like Meta [16][17] Company-Specific Analysis - Microsoft: Cloud revenue growth remains strong, with a 28.2% increase in Q3 2025, supported by robust demand and effective AI monetization strategies [12][21] - Amazon: Cloud revenue growth accelerated, benefiting from improved power supply conditions and increased order backlogs [12][13] - Google: AI is enhancing both cloud and core search business growth, with cloud revenue increasing by 34% year-on-year [12][13] - Meta: Increased AI investments are putting short-term pressure on profit growth, despite long-term revenue potential from AI-driven advertising [12][13] Capital Expenditure Trends - Total Capex for Microsoft, Google, Amazon, and Meta reached $112.4 billion in Q3 2025, reflecting a 77% year-on-year increase [9][25] - Approximately 50% of Capex is allocated to short-term assets, indicating a focus on immediate demand fulfillment [9][25]