Gene Munster

Return on AI at $AMZN. Check out how automation is improving operating margins. If they hit the high end of guidance for December (which they likely will), operating margin will be 12.2%. That compares to: Dec-25: 12.2% Est Dec-24: 11.3% Dec-23: 7.8% Dec-22: 1.8% Dec-21: 2.5% Dec-20: 5.5% Dec-19: 4.4%

$AMZN guided December revenue up by 3% and operating income up by 9%. Throw out the ranges they give on guidance. Focus on the high end because they typically come in at or above the high end. My 3% and 9% guide up is based on them hitting the high end of the ranges. That pop in operating income guide is likely being driven by AI in reduced headcount and more robotics.

While September results are good news on AWS, the big picture around competition remains a challenge. Google Cloud and Azure are growing at almost 2x faster than AWS, which means they continue to lose share. $AMZN

$AMZN reports 20% AWS growth vs. Whisper of 18.5%. Stock up 9%. To put into perspective how focused investors are on AWS, they beat overall revenue by 1.2%, and the stock is up 9%.

$AMZN is straight forward tonight. It's of course about AWS. Whisper is 18.5% growth.

$AAPL and AI for tonight: Bottom Line: Investors will soon start to warm up to what Apple will deliver next year. 1. Tonight investors aren't expecting to hear much, only that they reiterate that the new Siri comes out early next year. 2. I expect Apple's AI investment cadence will be consistent with the past, fractional compared to $META, $GOOG, $MSFT and $AMZN. They're investing around $12-$15B a year, compared to the others at more than $60B. 3. The reason why I expect investors to start to warm up on no new material updates is that we're getting close to the launch of the new Siri, now likely only 5 months away. This means we're enteri…

$AAPL tonight is all about the December iPhone guide that we’ll get on the call. Bottom line: I expect it to be favorable. For September, the iPhone whisper number is 10% growth, vs. Street in print at 9%. iPhone-related news has continued to be positive, even though analysts have not materially adjusted the consensus. For the December quarter, Street expectations call for 6% growth, in line with buy-side expectations. I expect iPhone commentary on the earnings call for December will indicate growth above 6%, closer to 8%.

Now that Meta has reset the expense bar, we have to wait until the December report to see if it starts paying off.

$MSFT was the least eventful of the three reporting tonight. December revenue guidance was in line with the Street, a slight disappointment, but the big picture remains intact. https://t.co/hLqGL4ges9

$META shares are down on a flipped script — expenses are now growing faster than revenue. That said, it’s the right decision to position the company to capitalize on AI’s potential. https://t.co/rAaPjMR8El

Bravo to $GOOG for accelerating Search in the face of chatbots. Sounds like the momentum will continue. P.S. My prediction: Waymo IPO in 2027. https://t.co/nBEv6vfP2P

Big-picture takeaway from $GOOG, $MSFT, and $META: The mojo of the AI trade took a step back, while the fundamentals took a step forward. https://t.co/ogxRthLtX3

What does $GOOG Search want to be when it grows up? The question came up at the end of the call and is relevant given the company is juggling four surfaces Search, AI Overviews, AI Mode, and Gemini. Sundar describes this as a “dynamic, expansionary moment,” because Search is evolving and engagement is increasing.. He adds "over time" changes are coming across Search, AI Overviews, AI Mode, and Gemini, users can expect the experience to become simpler. My take: The Search results page still feels like a high school science project gone amok. It sounds like Google recognizes that, and over the next couple of years wants to slowly make it si…

On the call, $GOOG management said AI Mode has 75M users in the U.S. They’re testing ads, but it’s too early to share details about those tests. My take: It’s only a matter of time before AI Mode ads are fully turned on. When they are, it will likely be a net positive for revenue growth even though some users may feel the ads clash with the spirit of generative AI providing a “real” answer.

Sundar says Waymo will add new experiences next year, possibly around personalization. It’s a good example of an area where Waymo has a head start over Tesla’s robotaxi offering. $GOOG $TSLA

$GOOG first question is what impact does agentic AI have on search? Answer: They think agentic is additive to search. My take: They're doing a great job of turning chat bots into search revenue today. Down the road, the playbook will get re written with agentic which is another hurdle.

$GOOG still expects tight capacity for Google Cloud in December and throughout 2026. That means whatever growth they report could have been higher if they had more capacity.

Sundar kicks off $GOOG, saying growth rates of queries accelerated in the September quarter compared to June. "AI is driving meaningful query growth because people are increasingly realizing they can get their questions answered."

$META call just wrapped up. I think I figured out why $META stock is down 9%. Expenses are growing faster than revenue, driven by third party cloud. The last two years it’s been the flip story. March revenue up 16% vs. expenses up 9%, June revenue up 22% vs. expenses up 12%. September revenue up 26% vs. expense up 32%. Next year it's going to be more like 18% revenue growth and 35% expense growth.

It looks like Zuck is most bullish on AI compared to Nadella, Jassy and Pichai based on Capex and spend on third party cloud for next year. $META, $GOOG, $AMZN, $MSFT

$GOOG guided 2025 Capex up by 7%. As expected. Looks like Google is setting up to grow Capex next year by 25% vs. $META up 60%.

Good news for $NVDA. Street is looking for $META to increase capex next year by 40%. My guess is it will be up 60%. They will give more detailed guide for next year in three months. All they said was it would be will be "an aggressive and significant" increase.

$META guided revenue up 3% for December (looking at the high end of the range). The guide would have been up around 4% if not for the revenue timing around Reality Labs.

$META Capex is going up for next year. CFO says compute needs have expanded meaningfully, and we will aggressively invest through both our own infrastructure and third-party providers. Capex growth will be notably larger, and total expenses will rise more quickly given increasing cloud costs. The stinger is the expense growth rates will increase because of cloud. Not sure who they will purchase the cloud from.

Metric on how addictive $META products are. They say there was double digit growth in US time spent on Facebook/Instagram y/y.

A small but powerful example of why $META is next to impossible to slow. Daily users were up 7.6% y/y reaching 3.54B people. Thats 43% of the world population. . More impressive is that y/y growth has been accelerating. Sep- 7.6% Jun - 6.4% Mar- 5.9% Dec 24 - 5.0% Sep 24 - 4.8%

$META call is live. Zuck says he will overbuild for the most optimistic case around Superintelligence. That means they will likely spend at a rate faster than Google, Microsoft and Amazon. That’s also how the Street is modeling our Capex for those companies with Meta up around 40% next year, Microsoft up 20%, Google up 13% and Amazon up 10%.

All of the important updates for $MSFT will come on the conference call guide at about 6p ET tonight.

I also don't understand why $MSFT is down 3%. Azure is up 39% (constant currency) vs Street at 37.5%. Unchanged from June which was 39%.

I don't’ understand why $META is down 7%. They effectively guided Dec revenue up by 3%. The actual mid point was $57.5B vs Street at $57.25. More importantly, the high end of the guide was $59B, which is likely where the revenue will come in for December, that’s where the 3% guide up comes from. That means growth in December will be around 22% compared to 26%. That's the same top line growth in June.