9 a. m. in Shanghai, Shenzhen, here in Hong Kong.You're watching the China show. I'm Yvonne Man with Annabel Jewelers. We're counting down to the opening of markets in Greater China.And our top stories this morning, risk assets in the red as Amazon's spending plans and weak US jobs data spook investors. Chinese stocks also set for their biggest weekly drop since November. HSBC prepares to slash and in some cases scrap bonuses for underperforming bankers.The details of that Bloomberg scoop coming up. Meanwhi ...

Investment Rating - The report suggests a focus on companies such as SanDisk (SNDK.O), SK Hynix (000660.KS), Samsung Electronics (005930.KS), and Micron Technology (MU.O) due to their potential in the AI-driven storage market [4]. Core Insights - The industry is transitioning from traditional cycles to AI-driven technological premiums and high growth, with storage becoming a critical bottleneck for AI computing efficiency [5]. - AI is driving exponential growth in storage demand, with significant increases in requirements for high-bandwidth memory (HBM) and solid-state drives (SSD) due to the scaling laws of model parameters [5]. - The valuation framework is being reshaped, with revenue growth and net profit margin expansion occurring simultaneously, indicating a period of high operational leverage in the storage sector [5]. Summary by Sections AI Value Chain - The AI value chain includes components such as computing chips (GPUs, CPUs, ASICs), storage (DRAM, SSD, HDD), networking, and energy solutions, highlighting the interconnectedness of these sectors [10][12]. - The storage segment is characterized by oligopolistic features, with high barriers to entry supporting high profitability [12]. Storage Demand and Hardware Architecture - Storage demand is categorized into cold, warm, and hot data, with different storage solutions (HDD, SSD, DRAM) tailored to each category's speed and capacity requirements [20]. - The architecture is structured in layers, with HBM for high-speed access, SSD for intermediate storage, and HDD for large capacity [29]. Large Language Model Storage Requirements - The report details the storage needs of large language models, emphasizing the importance of storage capacity and bandwidth in both training and inference phases [42][47]. - The growth in model parameters necessitates increased storage capacity, with significant implications for the demand for NAND and DRAM technologies [59]. Company-Specific Insights - Micron Technology (MU.O) is focusing on data centers and has made significant advancements in HBM3E technology, with a strong market demand for its products [64][70]. - SanDisk (SNDK.O) has undergone a restructuring, achieving notable revenue growth and improving profit margins through a focus on high-value enterprise SSDs [72][78]. - SK Hynix is benefiting from its early entry into the AI storage market, while Samsung is striving to catch up [79][81].

Market Overview - The U.S. stock market experienced a significant recovery, with the S&P 500 rising by 2%, marking its best day since May. The Dow Jones Industrial Average increased by 1,206 points, or 2.5%, surpassing the 50,000 level for the first time, while the Nasdaq composite rose by 2.2% [1]. Technology Sector - Chip companies were pivotal in driving the market rally, with Nvidia's stock jumping by 7.8% and Broadcom climbing by 7.1%, helping to recover from earlier losses [2]. - The optimism surrounding continued spending on artificial intelligence technology contributed to the gains, with Amazon's CEO announcing an expected investment of approximately $200 billion this year in AI, chips, robotics, and low earth orbit satellites [3]. Concerns in the Market - Despite the surge, the S&P 500 faced its third losing week in four, driven by concerns over Big Tech spending and the potential impact of AI on software companies, particularly after AI firm Anthropic released free automation tools [4]. - Amazon's stock fell by 5.6% amid doubts about whether the substantial investments would yield sufficient profits [3]. Cryptocurrency Market - Bitcoin stabilized after a significant decline, rising back above $70,000 after dipping close to $60,000 [5]. - The recovery in Bitcoin prices positively affected stocks of companies involved in the crypto economy, with Robinhood Markets increasing by 14%, Coinbase Global rising by 13%, and Strategy, a company focused on Bitcoin investments, soaring by 26.1% [7]. Metals Market - Prices in the metals market showed signs of stabilization, with gold rising by 1.8% to settle at $4,979.80 per ounce and silver increasing by 0.2% [5].

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Group 1: Amazon's Capital Expenditure Plans - Amazon's stock fell 11% in extended trading due to concerns over its $200 billion capital expenditure plans, which is the highest forecast among major companies [1] - The forecast represents a significant increase from last year's capital expenditures of approximately $131 billion, which was up from about $83 billion the previous year [1] - The planned spending is over $50 billion higher than analysts' expectations, indicating a more aggressive investment strategy [1] Group 2: Industry Spending Trends - Tech companies, including Google and Meta, have announced substantial spending plans on AI infrastructure, with Google planning to spend up to $185 billion and Meta estimating between $115 billion to $135 billion in 2026 [2] - The aggressive spending in the AI sector has been driven by the demand for advanced technology following the release of ChatGPT in late 2022 [2] Group 3: Amazon's Cloud Business Performance - Amazon Web Services (AWS) reported a 24% growth in sales to $35.6 billion, marking the fastest growth in 13 quarters [4] - AWS added nearly 4 gigawatts of computing capacity in 2025 and expects to double that by the end of 2027, indicating a strong demand for its services [5] - CEO Andy Jassy expressed confidence that investments in AI infrastructure will yield strong returns, similar to past successes with AWS [4][6] Group 4: Market Dynamics and Future Outlook - The AI market is evolving into a "barbell" structure, with AI-native labs on one end and enterprises on the other, while the middle consists of enterprises at various stages of AI application development [5] - Jassy suggested that the middle segment of the market could become the largest and most sustainable over time [6]

Core Insights - Amazon plans to invest approximately $200 billion in capital expenditures by 2026, primarily focused on AWS to enhance AI and core cloud workloads [1] - The company aims to leverage its infrastructure to improve shopping experiences, making them faster and more frequent across its Stores and grocery segments [2] Investment in AI and Cloud - CEO Andy Jassy emphasized the rapid monetization of AI capacity, stating that every customer experience will be reinvented with AI, necessitating cloud-based data and applications [3] - The enterprise value from AI will largely come from "agents," with a focus on trust and governance in data connections [4] Retail and Grocery Growth - Everyday Essentials category grew nearly twice as fast as other categories in the U.S. in 2025, accounting for one-third of units sold, with Amazon becoming a significant grocery player with over $150 billion in gross sales [5] - Same-day grocery delivery has been highlighted as a key driver, with customers using this service shopping more than twice as often as those who do not [5] Delivery and Operational Efficiency - 2025 marked Amazon's fastest year for Prime delivery globally, with nearly 70% more same-day items delivered compared to the previous year [6] - The company has over a million robots in its fulfillment network, which aids in reducing costs and improving delivery speeds [7] Financial Performance - Amazon reported net sales of $213.4 billion for the quarter, a 14% year-over-year increase, with North America revenue at $127.1 billion (+10%) and AWS revenue at $35.6 billion (+24%) [7] - Operating income reached $25 billion, and net income was $21.2 billion, translating to $1.95 per diluted share [7]

Amazon said Thursday it plans a staggering $200 billion in capital expenditures this year, sparking concern that the AI spending boom has entered an even more bubbly stage. The company's capex forecast was more than $50 billion above Wall Street expectations. That left some analysts uneasy about whether these huge investments will pay off."The strong long-term return on investing capital — I think that's the debate in the market today," Mark Mahaney, a tech analyst at Evercore ISI, said during a conference ...

Group 1: Company Performance - Amazon's shares fell over 11% in extended trading after reporting fourth-quarter earnings that missed expectations [1] - The company's capital expenditure projection for the upcoming year is $200 billion, significantly higher than analysts' estimates of $146.6 billion and up from approximately $131 billion in 2025 [2] Group 2: Market Reaction - The increase in capital expenditures and concerns about AI diminishing the value of software firms led to a tech sell-off, with the Nasdaq Composite dropping 1.59% and the S&P 500 declining 1.23% [3] - The Dow Jones Industrial Average also retreated by 1.2%, reflecting broader market pressures [3]

Core Viewpoint - Amazon is significantly increasing its capital expenditures by over 50% this year to enhance its artificial intelligence infrastructure, reflecting a broader trend among major tech companies to invest heavily in AI, which has led to a decline in its stock price by 9% in after-hours trading [1]. Group 1: Capital Expenditures and Financial Performance - Amazon is projected to invest approximately $200 billion in capital expenditures by 2026, up from about $131 billion in 2025 [5][14]. - The company’s forecast for first-quarter operating income is between $16.5 billion and $21.5 billion, which is below analysts' expectations of $22.04 billion [5]. - Amazon's capital expenditures are expected to exceed its operating cash flow, raising concerns among investors about potential overspending on AI infrastructure [11]. Group 2: Competitive Landscape and Market Response - The top four hyperscalers, including Amazon, Microsoft, Alphabet's Google, and Meta, are anticipated to collectively spend over $630 billion this year on AI infrastructure [2]. - Amazon's AWS reported a sales growth of 24%, the highest in 13 quarters, but this was overshadowed by the surge in capital expenditures [12][11]. - Competitors like Google and Meta received positive investor responses for their capital expenditure forecasts due to strong revenue growth, while Microsoft faced stock punishment despite meeting estimates [8]. Group 3: Strategic Initiatives and Changes - Amazon is making significant changes in its retail division, including closing all Fresh and Go stores and converting some into Whole Foods locations [16][20]. - The company is expanding its Whole Foods footprint and developing a large mega-store to compete with Walmart and Costco [18]. - Amazon's advertising business saw a 22% increase in sales in the fourth quarter, reaching $21.3 billion, with new AI options added to Prime Video for ad creation [18].

Market Performance - Market indexes experienced significant declines, with the Dow dropping 592 points (-1.20%), the S&P 500 down 84 points (-1.23%), the Nasdaq falling 363 points (-1.59%), and the Russell 2000 losing 46 points (-1.79%) [1] Amazon's Earnings Report - Amazon reported mixed Q4 results, with earnings of $1.95 per share, slightly below the Zacks consensus by 3 cents, but above the $1.86 per share from the previous year [2] - Revenues for the quarter were $213.4 billion, exceeding the anticipated $211.5 billion, and Amazon Web Services (AWS) also outperformed expectations with $35.6 billion compared to $34.9 billion [2] Investor Concerns - Despite the earnings beat, Amazon's shares fell 8% in after-hours trading due to a projected $200 billion in capital expenditures aimed at competing in the AI infrastructure sector, raising concerns among investors [3] - The company announced 16,000 layoffs this week, bringing the total to 30,000 since late last year, which raises questions about the sustainability of such high spending amid lower-than-expected operating income [4] Other Company Performances - Roblox shares increased by 20% following its Q4 earnings release, reporting a loss per share of -$0.45, which was better than expected, alongside a 69% year-over-year growth in Daily Active Users (DAUs) to 144 million [5] - Affirm exceeded estimates in its fiscal Q2 report with earnings of 37 cents, a 61% year-over-year increase, and revenues of $1.12 billion, surpassing expectations, but shares still fell 4% due to concerns over consumer credit deterioration [6]