Investment Rating - The report recommends "Buy" for Microsoft and "Watch" for Google, Amazon, and Meta [7] Core Insights - The AI narrative among US tech giants has shifted multiple times since 2025, with Google showing strong stock performance while Microsoft, Meta, and Amazon have faced consolidation [3] - Despite strong Q3 2025 earnings validating AI demand, stock performance has diverged due to concerns over long-term AI investment returns and macroeconomic risks [3] - The cloud computing sector continues to show robust growth, with significant increases in revenue and order backlogs across major players [4][24] Summary by Sections 1. Market Performance - Google has outperformed, while Meta and Microsoft have seen stock price consolidation [10] - The valuation of Google has improved significantly, while Meta and Microsoft have returned to mean valuations [11] 2. Industry Overview - Strong cyclical business growth driven by AI demand, with optimistic capital expenditure guidance for 2026 [18] - Q3 2025 earnings for tech giants exceeded expectations, with a positive outlook for Q4 [19] 3. Q3 2025 Earnings Analysis - Google’s advertising revenue reached $74.18 billion, up 12.7% YoY, driven by strong search and YouTube ad performance [20] - Amazon's e-commerce segment saw a decline in operating margin due to one-time costs, but AI-driven products are expected to generate significant future revenue [21] - Cloud revenue from Microsoft, Google, and Amazon exceeded expectations, confirming strong AI computing demand [24][25] 4. Capital Expenditure Insights - Microsoft’s capital expenditure for Q1 FY26 was $34.9 billion, up 74.5% YoY, with significant increases in AI capacity expected [31] - Google raised its 2025 capital expenditure guidance to $91-93 billion, reflecting ongoing investments in technology infrastructure [32] - Amazon's capital expenditure is projected to reach $125 billion in 2025, with ongoing capacity constraints primarily in power supply [32] 5. Investment Recommendations - The report highlights the strong cash flow and cost control capabilities of tech giants, providing a safety net for earnings [6] - AI computing demand is expected to continue growing, although the commercial viability of downstream AI applications remains to be fully realized [6]

Core Viewpoint - Amazon's Q3 2025 earnings report exceeded revenue expectations but provided slightly lower guidance for operating profit in Q4 2025 [4][5]. Revenue and Profit Summary - Q3 2025 net sales reached $180.17 billion, a year-over-year increase of 13.4%, surpassing Bloomberg's consensus estimate by 1.32% [5] - Operating profit was $17.42 billion, which was 11.7% below consensus expectations, primarily due to one-time expenses; operating margin decreased by 1.3 percentage points to 9.7% [5] - Net profit stood at $21.18 billion, with an EPS of $1.95, exceeding consensus estimates by 25.3% [5] - Q4 2025 net sales guidance is set between $206 billion and $213 billion, indicating a year-over-year growth of 9.7% to 13.4%, while operating profit guidance is between $15.5 billion and $20.5 billion, reflecting a year-over-year decline of 1% to 22.6% [5] AWS Performance - AWS revenue accelerated to $33 billion in Q3 2025, marking a 20.2% year-over-year growth compared to 17.5% in Q2 2025; AWS operating margin was 34.6%, up 1.7 percentage points quarter-over-quarter but down 3.4 percentage points year-over-year [6] - Demand for the self-developed chip Trainium2 is high, with revenue growth of 150% quarter-over-quarter, and future services are expected to expand to small and medium-sized clients [6] E-commerce Division Insights - In the e-commerce segment, North America reported an operating profit of $4.79 billion with a margin of 3.3%, while international operations generated $1.2 billion with a margin of 2.9%; both regions experienced declines in operating margins due to one-time legal settlements and job cut expenses [7] - The AI e-commerce assistant Rufus has reached 250 million annual active users, with a 140% year-over-year increase in monthly users, potentially leading to over $10 billion in annual sales [7] Capital Expenditure and Capacity - Amazon's capital expenditure for the trailing twelve months (TTM) was $115.9 billion, a 77.1% increase year-over-year, with Q3 2025 cash capital expenditure at $34.2 billion [9] - For 2025, cash capital expenditure is projected to reach $125 billion, a 60% increase, with expectations of continued growth into 2026 and a doubling of overall capacity by the end of 2027; current capacity constraints are primarily related to power supply [9]