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🗞️ Is AWS Under Pressure?
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Market Performance
S&P 500: 6,238.01 (-1.60%)
Nasdaq: 20,650.13 (-2.24%)
Dow Jones: 43588.58 (-1.23%)
The world's largest cloud providers have now all reported their Q2 earnings. While Amazon Web Services (AMZN) posted solid results, investors are asking one uncomfortable question: Why isn't AWS growing as fast as its competitors?
AWS accelerated revenue growth to 18% and surpassed expectations with $30.87 billion in quarterly revenue.
But Microsoft Azure grew 39% and Google Cloud expanded 32%, both outpacing the market leader.
Even more telling? On a dollar basis, Azure appears to have added roughly $2 billion in new revenue this quarter compared to AWS's $1.6 billion addition.
Amazon CEO Andy Jassy's defense was predictable: "We have a meaningfully larger business... the second player is about 65% of the size of AWS."
Translation: we're bigger, so slower growth is expected.
Our Takeaway
AWS remains the undisputed cloud leader with massive resources, but one quarter doesn't make a trend.
However, if Azure continues capturing more AI workloads while growing faster in both percentage and absolute terms, Amazon's $200 billion market cap loss on Friday might just be the beginning of a larger recalibration.
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Market Overview
Friday's brutal selloff was triggered by a dismal jobs report that sent shockwaves through every corner of the market.
The economy added just 73,000 jobs in July, well below the expected 100,000, while May and June figures were revised dramatically lower.
The jobs data painted a picture of an economy hitting the brakes just as President Trump's tariff wars intensify.
Banks led the decline, with JPMorgan, Wells Fargo, and Bank of America each tumbling over 3% on fears that economic weakness could curb loan growth.
Tech giants weren't spared either. The "Magnificent 7" all closed in the red, with Amazon's 8% plunge leading the charge after disappointing guidance overshadowed its cloud growth.
The weak employment data completely shifted Fed expectations, with traders now pricing in an 86% chance of September rate cuts, a dramatic reversal from just days earlier when Powell suggested patience on cuts due to tariff-driven inflation concerns.
Adding fuel to the fire, Trump raised tariffs on Canada to 35% and fired the Bureau of Labor Statistics commissioner, calling the jobs report a "mistake."
Stock Moves Deciphered 📈
Avis Budget Group (AVIS) stock fell 3.6% after Goldman Sachs downgraded it to sell, warning of 38% downside after a 75% three-month rally. Despite recent gains, Goldman explained that Q2 earnings plunged 75.6% with "stretched" valuation concerns.
Ingersoll Rand (IR) stock tumbled 11% despite raising full-year guidance. Q2 showed mixed results with 8% order growth but 4% EPS decline to $0.80 per share.
Mr. Cooper Group (COOP), a mortgage servicer, reported Q2 EPS of $3.04, missing the consensus of $3.20. Despite revenue pressures, a strong tangible book value of $75.90 and acquisition synergies meant that the stock gained 12%.
Headlines You Can't Miss
China's BYD breaks growth streak with July delivery slump as EV price war intensifies competition.
Singapore's stock market is soaring as experts say the bull run is just getting started.
Asia stocks trade mixed as investors weigh tariffs and OPEC+ output hike announcements.
Ray Dalio sells last stake in Bridgewater and steps down from board, completing management transition begun in 2022.
Swiss luxury stocks under pressure as Trump raises import duties on Switzerland to 39%.
European pharma stocks fall after Trump demands cheaper drug prices from 17 major companies.
Trending Stocks
Chevron (CVX) - The energy giant's second-quarter earnings dropped 44% to $2.49 billion, hurt by lower oil prices and costs from the Hess acquisition.
Despite the challenging environment, Chevron maintained its dividend and continued capital discipline.
CEO Quote🎤: “The completion of the Hess acquisition further strengthens our diversified portfolio and positions us to extend our production and free cash flow growth profile well into the next decade.”
Reddit (RDDT)- The social media platform soared 15% after reporting its first-ever profit with $0.45 EPS, crushing estimates. Revenue jumped 78% to $499.6 million, driven by international expansion and advertising growth.
CEO Quote🎤: “The internet is evolving, and our role as a community-powered platform for human connection is only becoming more critical.”
First Solar (FSLR) - The solar manufacturer reported strong Q2 results with net sales of $1.1 billion and earnings of $3.18, up from $1.95 in the prior quarter.
CEO Quote🎤: “Solar companies faced growing constraints on access to capital in the second quarter due to uncertainty around the U.S. presidential election.”
What’s Next?
Key Earnings Today 👇
Palantir (PLTR): Q2 revenue forecast at $939 million vs. $678 million last year. Adjusted earnings are expected to grow from $0.09 per share to $0.14 per share.
MercadoLibre (MELI): Q2 revenue forecast at $6.66 billion vs. $5.07 billion last year. Adjusted earnings are expected to grow from $10.48 per share to $11.89 per share.
Axon Enterprise (AXON): Q2 revenue forecast at $641 million vs. $504 million last year. Adjusted earnings are expected to grow from $1.2 per share to $1.46 per share.
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