20 October 2025 AMZN 250.00 USD Amazon.Com Inc Rating Outperform Price Target U.S. Internet Mark Shmulik +1 917 344 8508 mark.shmulik@bernsteinsg.com Wenhuan Chang +1 917 344 8546 wenhuan.chang@bernsteinsg.com Lavnik Balyan +1 917 344 8563 lavnik.balyan@bernsteinsg.com Amazon: Is AWS in last place in AI? [Part I] Growing pies and shrinking slices. If there's a singular framework to tackle tech debates, this is it. Facebook and TikTok, Google and ChatGPT, Uber and Robotaxis, and now AWS and AI/ neo-clouds. I ...

Core Insights - Apple and Microsoft are both iconic brands that have significantly influenced the personal computer revolution since their inception in the mid-1970s [1] Current Performance - As of September 18, 2025, Microsoft's stock closed at $508.45, reflecting a nearly 21% increase year-to-date, while Apple's stock is priced at approximately $238, down about 5% for the same period [3] - Microsoft's advantage is partly due to its lower exposure to tariffs compared to Apple, which relies heavily on iPhone sales, with over 220 million units sold annually, most of which are manufactured in China [3][4] Growth Potential - Apple's growth is heavily tied to the iPhone, which may limit its ability to find new growth engines, according to industry analysts [4][5] - In contrast, Microsoft is positioned at the forefront of cloud computing and AI, providing it with multiple avenues for growth beyond a single product [5][6] - Microsoft is reportedly growing revenue and profits at a faster rate than Apple, which may lead to higher market returns and give Microsoft a competitive edge [6][7]

Core Insights - The data center market is experiencing explosive growth driven by the demand for AI, machine learning, and cloud computing technologies [1][2][4] Industry Overview - The global data center market is projected to grow at a compound annual growth rate (CAGR) of 11.2% from 2025 to 2030, largely due to the rapid adoption of digital transformation technologies [2] - In the U.S., which represents 40% of the global market, data centers are expected to grow at a CAGR of 10.7% through the early 2030s, presenting investment opportunities in AI-related infrastructure [3] Company Profile: Quanta Services - Quanta Services, with a market cap of $65.77 billion, specializes in the design, installation, and maintenance of critical infrastructure networks [5] - The company offers full-spectrum services including engineering, procurement, and construction for high-voltage power transmission and distribution, applicable across various industries [6] Financial Performance - Quanta Services reported a year-over-year revenue growth of 21.1% and has an all-time high backlog of nearly $36 billion [9] - The company's net income increased from $486 million in 2021 to $905 million in 2024, marking an over 86% rise, while net cash from operating activities surged by nearly 258% from $582 million to $2.08 billion [12] Market Position and Analyst Ratings - Quanta Services has received a Moderate Buy rating from analysts, with 14 out of 26 recommending a Buy and 12 a Hold [13] - Institutional ownership is significant, with 90% of the company's float held by institutional investors, who have invested $8.66 billion over the past year [13] Future Outlook - The company raised its full-year 2025 financial guidance, projecting earnings growth of 11.13% from $9.34 per share to $10.38 per share for 2026 [11] - Quanta Services is well-positioned to capitalize on the growing demand for AI data centers, which is expected to drive further profitability [4][10]

Core Insights - PowerBank Corporation is strategically expanding into the data center market, driven by increasing power generation demand and the growth of AI and cloud computing [2][4]. Industry Overview - Cumulative new U.S. power generation demand is expected to reach 450 gigawatts by 2030, with energy demand in Ontario projected to increase by 75% by 2050 [2]. - The data center market is valued at USD 242.72 billion in 2024 and is projected to grow to USD 584.86 billion by 2025 [2]. Company Strategy - PowerBank has over 100 MW of completed projects and a development pipeline exceeding 1 GW, focusing on data center power supply, storage, and development [4][6]. - The company is currently evaluating potential data center opportunities and intends to leverage its expertise in energy infrastructure [4]. Market Demand - The expansion of AI, cloud computing, and high-performance computing is significantly driving the demand for data centers, which may consume as much as 9% of total U.S. electricity by 2030 [3].

Core Insights - Keppel DC REIT has announced a 12.8% increase in its distribution per unit (DPU) to S$0.05133 for the first half of 2025, showcasing strong rental performance and a significant rise in distributable income [2][3] - The REIT's DPU increase is notable in a challenging environment where many REITs are experiencing declines in DPU, indicating its strong operational and financial management [3][4] DPU Performance - The DPU increase is attributed to strong rental performance, with distributable income surging 57.2% year-on-year to S$127.1 million [2] - At a unit price of S$2.38, the annualized trailing dividend yield stands at 4.2% [2] Operational Highlights - The REIT maintains a high occupancy rate of 95.8% and has no major contracts due for renewal for the remainder of the year [5] - Keppel DC REIT operates in three segments: Singapore (66% of AUM), Asia-Pacific (15%), and Europe (19%), with high occupancy rates across its properties [6] Financial Management - The REIT has a low aggregate leverage of 30% and a cost of debt at 3%, down 0.1 percentage points from the previous year [5] - The interest coverage ratio is strong at 5.9 times, indicating robust financial health [5] Growth Drivers - Keppel DC's performance is bolstered by active lease management, focusing on high-quality tenants, and recent acquisitions, including a second data center in Japan [8] - The REIT benefits from structural growth trends in cloud computing, AI, and digitalization, leading to strong demand for data center properties [10] Future Outlook - With interest rates expected to trend down, Keppel DC REIT is positioned to benefit from lower financing costs and improved asset valuations, potentially leading to further growth in distributions [12] - The REIT's pipeline of developments and potential acquisitions suggests the possibility of higher distributions in the future [13][14]

Core Viewpoint - The 2025 China Computer Conference (CNCC2025) is being held in Harbin, focusing on the theme "Digital Intelligence Empowering Infinite Possibilities," highlighting the significance of AI in driving growth in the cloud computing industry [1] Group 1: AI and Cloud Computing - AI is identified as the core engine driving growth in the cloud computing sector, with significant demand for computing power arising from large model training and inference [1] - Major global cloud vendors are increasing capital expenditures for high-performance infrastructure and enhancing AI development tools and platform services to accelerate large-scale implementation across various industries [1] - The investment opportunities in the computer industry are viewed positively due to the incremental space and profit prospects brought by AI [1] Group 2: Domestic Technology and Software Development - The current external environment is marked by disturbances, with increased policy risks and uncertainties, emphasizing the urgency for China's technological self-reliance [1] - The push for domestic production is expected to accelerate, presenting new development opportunities in sectors such as trusted computing and industrial software [1] - In the trusted computing field, companies with competitive advantages in basic hardware, basic software (databases, operating systems, middleware), and application software are recommended for attention [1] - In the industrial software sector, companies excelling in product design, production control, and management processes (including EDA, CAD, CAE, CAM, MES, CRM, ERP) are highlighted as having competitive advantages [1]

Financial Data and Key Metrics Changes - In Q3, cloud revenue rose by 27%, marking five consecutive quarters of growth exceeding 25% [7][8] - Total revenue growth was 11%, with current cloud backlog increasing by 27% [8][30] - Free cash flow increased by 5%, while operating profit rose by 19% [8][34] - Total revenue reached EUR 9.1 billion, up 11%, with predictable revenue rising to 87% [33][34] Business Line Data and Key Metrics Changes - The Cloud ERP suite delivered 31% growth in Q3, representing 87% of cloud revenues [30] - Software licenses revenue decreased by 42% in Q3 [32] - Non-IFRS cloud gross margin expanded by 1.1 percentage points to 75.1% [34] Market Data and Key Metrics Changes - Cloud revenue performance was particularly strong in APJ and EMEA regions, with Brazil, France, Germany, India, Italy, and South Korea showing outstanding performance [33] - The U.S. public sector is showing early signs of improvement, with a major framework contract awarded to SAP by the U.S. Army [32][34] Company Strategy and Development Direction - The company aims to accelerate total revenue growth through 2027, leveraging AI as a key enabler [7][28] - SAP's strategy focuses on software and cloud solutions rather than building infrastructure, partnering with strong infrastructure partners instead [16][88] - The introduction of AI agents and tools is central to enhancing customer value and operational efficiency [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Q4 pipeline, indicating a strong recovery in the U.S. public sector and manufacturing [47][51] - The company anticipates reaching the lower end of its cloud revenue outlook for fiscal year 2025 due to delayed bookings [36][37] - Management remains optimistic about the potential for revenue acceleration in 2026, supported by a robust pipeline [77][78] Other Important Information - The acquisition of Smart Recruiters was completed, enhancing SAP's capabilities in talent acquisition [31] - The company is focusing on high-quality data and AI integration to drive business value [66][70] Q&A Session Summary Question: Update on demand backdrop in U.S. public sector and manufacturing - Management noted positive early signs in the U.S. public sector and a strong Q4 pipeline, indicating a recovery in these sectors [45][47] Question: Insights on backlog and cloud revenue expectations - Management expressed confidence in the Q4 pipeline and the potential for a better exit rate for CCB growth than previously expected [51][52] Question: Uptake of SAP ERP transition options - Management indicated positive momentum in the pipeline and high interest in the transition options, with expectations for initial deals in Q4 [54][58] Question: Competitive position versus Oracle - Management emphasized the strength of SAP's strategy and the value provided to customers, asserting that the current approach is effective [86][88] Question: Free cash flow guidance and conversion - Management highlighted the impact of tax cash out phasing and working capital dynamics on free cash flow expectations for Q4 [80][84]

Core Thesis - SAP SE is positioned as a leading enterprise software company that has successfully transitioned to a cloud-first model, enhancing its growth potential and market visibility [2][5]. Financial Performance - As of October 10th, SAP's share price was $265.53, with trailing and forward P/E ratios of 41.67 and 33.11 respectively [1]. - Cloud revenue increased by 26% year-over-year, while cloud ERP grew by 33% year-over-year, indicating strong demand for its services [4]. - The cloud backlog has risen nearly 30% to €18 billion, providing visibility for future growth [4]. - Free cash flow is expected to rebound to €8 billion in FY2025, supported by expanding margins and a solid net cash position [4]. Customer Retention and Market Position - Over 85% of new bookings are cloud-based, with a customer retention rate exceeding 98%, which creates significant switching costs and a durable competitive advantage [3][4]. - SAP's systems are deeply integrated into corporate workflows, reinforcing its position in the market [3]. Growth Strategy - The company aims for long-term double-digit growth through the migration of over 300,000 customers to cloud subscriptions, expansion of AI features, and entry into new verticals and SMEs [5]. - Investment cycles are winding down, and operational efficiency is expected to improve as cloud operations scale [5]. Market Perception - Despite being undervalued in U.S. markets due to its operational complexity and European roots, SAP is recognized for its scale, resilience, and potential for compounding growth [5][6]. - The stock has depreciated approximately 9.23% since previous bullish coverage, but the long-term growth thesis remains intact [7].

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Earnings season in technology can bring all kinds of beautiful stories. Did you have a tax dispute with Brazil on your bingo card for Netflix. Would tell us about the world of streaming.I did not have Brazil tax issues on my bingo card, but I think the Netflix earnings were actually pretty decent. You know, we forget that Netflix has actually come a long way from a free cash flow growth perspective. They were only generating about 1.6% billion about two and a half years ago, and now they're generating close ...