TMTB Morning Wrap

Good morning. Futures +1.5% already making up most of yesterday’s decline helped by strong Tech earnings last night, especially AMZN’s. BTC +2.5%. Asia saw mixed price action on Friday: TPX +0.94%, NKY +2.12%, Hang Seng -1.43%, HSCEI -1.91%, SHCOMP -0.81%, Shenzhen -0.32%, Taiwan TAIEX -0.19%, Korea KOSPI +0.5%

We’ll hit earnings first: AMZN, AAPL, RDDT, WDC, NET, TEAM, ROKU then move onto the usual…

Let’s get to it…

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AMZN +13%: Hello acceleration my old friend! AWS re‑accelerates to +20% y/y, rev beat across the board, ex‑items operating income beat the Street, and Q4 guidance bracketed consensus—fueling the “AWS unlock” narrative. Jassy delivers a 180 in tone on the call.

This is the AWS and Jassy bulls have pleaded for and it came one quarter earlier than expected. The print was pretty clean across the board (a bit of Q3 EBIT adjustment for fines notwithstanding). Q4 AWS bar likely going to ~22.5% coming of today and bulls will think mid 20s likely by end of June as more capacity continues to come online.

Bulls EPS moving closer to $9 and $12 for CY26/CY27. 30x $9 = $270 seems like a good first stop.

We think the narrative coming out of the print is as clean as they come: AWS accel, retail OI thesis still in full force helped by accelerating robotics rollout, continued operating leverage from layoffs, Rainer ramping, Trainium going from liability to excellent bet (although still a distant 2nd to GOOGL’s on the custom silicon wars), and stock has underperformed massively (although I wouldn’t say positioning is low - lots of bulls already in the stock).

How do we think about valuation and where do we think AMZN go over the next 12 months in our bull case? We think the main overhang on valuation has been a lack of accel and think AMZN has the largest room for multiple expansion out of all the internet large caps:

Here’s what we wrote in a weekly at the beginning of September and we’re sticking to it: