Episode summary
Businessweek Daily: Amazon Chip Earnings (Podcast)
Bloomberg Businessweek Daily
· · Hosts: Carol Massar, Tim Stenovec · Guests: Kunjan Sobhani, Anurag Rana, Jake Silverman, Liz Ann Sonders, Mike Townsend
Summary
Amazon’s results showed a classic tension between strong cloud growth and heavy spending. The host noted that AWS net sales excluding currency rose 39%, while the company guided to fourth-quarter net sales of $240 billion to $247 billion and roughly $220 billion in 2026 capex. The guest on tech said investors were reacting because Amazon only met, rather than beat, cloud expectations, even though management signaled AWS sales could grow above 40% in 2027 and 2028. The discussion framed the spending surge as a long-term bet on cloud demand, application modernization and market share, but also a warning that higher rates and political resistance to data center buildouts could pressure returns and cash flow.
Intel’s report was much harsher. The host said the stock fell more than 20% after revenue guidance of $15 billion to $16 billion missed the Street’s $17.05 billion estimate, with adjusted EPS guided to $0.25 versus $0.43 expected and gross margin outlook of 38% versus 42.8% expected. The semiconductor analyst said weak PC demand, supply issues in data center components and a gross margin reset showed the company is still trying to balance future investment with near-term profitability.
The panel also discussed SanDisk, where guidance was slightly better than expected, but investors still wanted bigger beats and stronger long-term contract signals. Later, Liz Ann Sonders argued the market is becoming less tolerant of misses, while Mike Townsend said the midterm setup points to a more fluid political backdrop but not necessarily a major market shock.
Key takeaways
- Amazon’s AWS revenue grew 39% ex-FX, but the tech analyst said investors wanted a beat, not just a meet.
- Intel’s fourth-quarter guide of $15 billion to $16 billion and 38% gross margin was materially below expectations, driving a share drop of more than 20%.
- The semiconductor analyst said Intel’s PC weakness and data center supply constraints are preventing revenue gains from offsetting margin pressure.
- Liz Ann Sonders said the market is showing less tolerance for misses and is punishing companies that fall short of whisper expectations.
- Mike Townsend said midterm uncertainty can lift volatility, but markets historically improve after the election is over.
Notable quotes
“AWS sales to be above 40% into 27 and 28. I think that's also very, very strong numbers, uh, given where we are in the cycle”
“Intel says we've heard this before from the semiconductor space. Intel says it's unable to meet all of strong server chip demand”
“So the mix of combinations between data center and pieces is not helping until”
“there's less tolerance for misses”
“I think what has changed in the last, um, I would say six months or so are twofold”
How the episode opens
This is Bloomberg Businessweek daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance and tech news. As it happens. The Bloomberg Businessweek daily podcast with Carol Massar and Tim Stanback.
We got to just kind of recap what we've been seeing, because right now, Amazon, uh, not as, uh, down as much as it was earlier, still down about 6.2% here in the aftermarket. And, uh, we're taking a look again, some of the headlines when it comes to Amazon, uh, still sees a year cash CapEx, about $220 billion sees fourth quarter net sales, uh, 240 billion to 247 billion. Street estimate was for two 44.52 billion.
And then again, some look at the third quarter backward AWS, of course, Amazon Web Services net sales x FX currency up 39%. The estimate was for a gain of up about 38%. But again, investors, um, not totally loving what they got from the, uh, not totally loving what they got from Intel, either shares of or Intel down more than 20% right now.
This after its revenue forecast, missed analysts estimates it was hurt by sputtering demand for PC processors and supply chain problems with its lucrative data center components. I want to bring in John Silvani, senior semiconductor analyst for Bloomberg Intelligence. John, this stock was up 150% going into today's print, but still, uh, a 20% haircut is a big haircut no matter which way you look at it.
What's your take on this print? Yeah, I mean, look, the massive misses on the pork side is just, uh, pretty surprising. Um, we all knew that the PC market is not looking that strong, but the results that came in, uh, are, again, surprising.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- amazon capex
- intel earnings outlook
- pc processor demand
- e-commerce slowdown
- holiday sales expectations
Companies and tickers mentioned
- AMZN
- INTC
- SCHW
- Amazon
- Intel
- Charles Schwab
Watch the episode
Watch “Businessweek Daily: Amazon Chip Earnings (Podcast)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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