TMTB Morning Wrap

Good morning. Futures -25bps. Not much incremental news overnight on the Iran front. Oil +3%. BTC +50bps. Asia mainly green overnight: TPX +2.1%, NKY +1.43%, Hang Seng +2.79%, HSCEI +2.31%, Taiwan TAIEX -0.34%, Korea KOSPI +2.74%,. Memory strong with Samsung +3% / SK Hynix +6% although Nanya -3%.

Let’s get straight to it…

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SAP: JPMorgan Downgrades to Neutral, PT Cut to €175 from €260 — Cloud Backlog Decelerating Into Rising Investment Cycle

Cloud backlog growth has decelerated steadily (29% Q1’25 to 25% Q4’25) and the firm expects further moderation through 2026, a problem in a market demanding acceleration to counter software bear arguments. The analyst adds two structural concerns: a potential shift toward consumption-based revenue (CEO Klein increasingly signaling this) that could introduce volatility and pressure gross margins, and intensifying AI competition forcing higher investment spend — peers like Salesforce, Workday, and ServiceNOW are all guiding below consensus on margins and ramping M&A. Non-IFRS EBIT/EPS estimates cut L-MSD% for 2026–2028 on softer margin expansion.

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AMZN: Amazon says AWS’ Bahrain region ‘disrupted’ following drone activity - Reuters

Amazon said on Monday ​its Amazon Web Services region in Bahrain has been “disrupted” amid the current conflict ‌in the Middle East, marking the second time in a month that its operations have been affected by the war.

The disruption is due to drone activity in the area, an Amazon spokesperson said, following a ​Reuters inquiry. Reuters is first to report on the disruption. As of Monday night, ​AWS had not updated its status page to reflect the impact.

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AVGO/TSM: Broadcom flags supply constraints, says TSMC capacity a bottleneck - reuters

According to Reuters, Broadcom says TSMC is hitting production capacity limits as surging AI chip demand strains the supply chain, with constraints expected to persist through 2026 until capacity expansions come online in 2027. TSMC, the world’s leading contract chipmaker for customers including Nvidia and Apple, acknowledged in January that capacity was tight amid the AI infrastructure buildout

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ASML: SK Hynix released a filing related to the purchase of EUV tools for €6.9bn to be delivered in 2026-27, likely implies shipmment estimates of 30 tools in FY26/FY27.

Prior update was 20 tools starting in mid 2025, so this update appears to be an uptick.

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AAPL: Evercore ISI Sees Services Flywheel Driving Monetization Upside, Reiterates Outperform