BABA Reddit Mentions | ChartExchange

AMZN had huge growth in aws, their eps was a staggering beat over expectations, they raised capex because it’s guaranteed to create huge future profit, and the future is extremely bright. That’s the story I hear everyone repeating today.
So, what is everyone missing?
1. They missed guidance. Yes really, they guided lower than expectations.
2. Their eps number included a big unrealized gain in their anthropic investment. Paper gains. Actual eps barely beat expectations.
3. AWS growth is 100% tied to the insane capex levels they are pushing. Like of course they are growing, look at how much they are spending to grow, they have the highest capex out of every mega cap. Plus every datacenter operator is growing right now.
4. Their free cash flow is already very negative, and yet they are increasing capex further.
Datacenters are all projecting huge, infinite growth. All while the largest ai companies that utilize this new growth continue to lower their token prices. Thats right, there is sooooo much demand out there that they have to lower their prices, even though they are deeply in the red. Makes sense.
Cheap Chinese ai models are showcasing that you can actually train and run models for a fraction of the cost and compute power that current US models need. Just today it came out that Kimi (Moonshot’s new model) was trained on a 20k NVDA chip cluster provided by BABA. Thats roughly a 25-35 MW datacenter. Basically a datacenter for ants. Meanwhile every US company in this space is building out multiple GW datacenter clusters and paying extremely elevated surge pricing for the components that fill out the datacenters because omg we need it soooo bad!!
AMZN is pushing ahead, jamming the gas pedal to the floor on datacenter buildout. They are not alone. If they stop, the market will destroy them. Can you imagine the carnage if they cut capex and said yeah we messed up, we overbuilt? They can’t blink, they must maintain the status quo of ai is infinite demand and all of this spending is a super good idea. They have to drive off the cliff while holding hands with all of the other mega caps. Honestly I think they have already left the cliff edge.
If your thoughts now are “well, management isn’t stupid, they see the demand, they would not blow themselves up, they are being smart”. Think again. Any executive or person in a position of power in these companies has to toe the line. If you speak up in a meeting about ai not delivering, or not being worth it, or maybe being overhyped and applied to use cases where it doesn’t fit or provide any benefit… you will lose your job. Why? Because these companies are in the business of selling ai demand. And how the hell can they do that if their own internal conclusions are “well it’s good but not that good”. They must all maintain the viewpoint of ai is incredible, it can do everything, we need more of it right now.
But why? WHY would they all collectively do something that is very clearly going to wreck their balance sheets for years to come? Because the Trump admin has promised them the moon in exchange for them pumping the market up into midterms. When we get to midterms, reality will kick in. They will pop the bubble, pull back on spending, and get bailouts as needed. Trump and his friends / donors will have made their billions off of the market moves by then (they already kind of have). Of course, it’s always possible that Trump screws them all, doesn’t back them up as promised and watches it all burn. Impossible to know for sure.
Anyways, all to say I think you need to be very careful if you are long any of the mega caps from here on out. Yes there will continue to be days like today where things fly higher. But the medium to long term trend is going to be very, very ugly. And with AMZN leading the capex race, I think they are probably going to get hit the hardest over time.