The article argues that Alphabet and Amazon have durable moats that can keep earnings growing for decades, and that their post-earnings sell-offs over heavy AI spending offer a better entry point. Alphabet fell about 13% after its Oct. 30 report, even though Google Cloud revenue more than doubled to about $31 billion and its operating margin rose to 36% from 24%; the stock trades at 17 times 2026 earnings estimates versus 21 for the Nasdaq-100 average. Amazon's AWS revenue grew 39%, its sixth straight quarter of faster growth, but shares slid about 7% in pre-market trading on Oct. 30 and trade near 30 times 2026 earnings estimates. The main risk cited is that AI spending keeps weighing on free cash flow, and profits could fall short if AI demand cools before those data centers pay off.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
GOOGLAmazoncloud computingAI investment
Open a keyword to see other news on the same topic.
Related news
- Alphabet Failed Wall Street’s New AI Test. Amazon Takes It Tonight.
Alphabet shares fell about 10% in premarket trading after its third-quarter results missed EPS consensus by 28.52% and ended a 12-quarter beat streak, even though Google Cloud grew 103%. Capex reached $51.36 billion, free cash flow was negative $9.07 billion, and management signaled a significant increase in 2027 spending. The article contrasts this with Oracle, which rose 11% after targeting more than $30 billion in annual free cash flow by FY2029. Amazon reports tonight with AWS revenue up 37% last quarter to $42.23 billion, a 39.4% operating margin, and a raised 2026 cash capex outlook of about $220 billion from $200 billion. The author is watching whether AWS holds near 37% growth and whether Andy Jassy gives a free cash flow recovery timeline, since he cited servers breaking even in a little less than three years but gave no date for free cash flow.
- Amazon vs. Alphabet: Is GOOGL's Cloud Growth Being Undervalued?
Amazon and Alphabet are making their cloud businesses more profitable while heavy AI infrastructure spending weighs on cash flow, and their stocks trade at similar valuations: 23.64 times forward earnings for Amazon and 22.83 for Alphabet, per Yahoo Finance. AWS posted $42.2 billion in second-quarter sales, up 37%, with operating income rising to $16.6 billion from $10.2 billion, though it accounts for only 21% of sales. Google Cloud revenue jumped 82% to $24.8 billion and its operating income rose from $2.8 billion to $8.8 billion, giving investors reason to reassess the gap with AWS. Beyond cloud, Amazon's North American retail operating income reached $9.1 billion and advertising grew 26%, while Alphabet's Search and other revenue rose 17% to $63.3 billion and consolidated operating income climbed 30% to $40.8 billion. The core question is which company earns more from the money it invests.
- Alphabet Sinks 11% as AI Spending Pushes Cash Flow Negative Again; Microsoft and Meta Edge Higher, Amazon Slips
Alphabet shares fell about 11% in early trading after its Q3 2026 revenue reached 127.58 billion USD, up 25%, but EPS of 2.12 USD missed estimates, mainly due to an 8.7 billion USD loss on its equity investments. Capital spending rose to 51.3 billion USD, pushing free cash flow to negative 9.1 billion USD, its second straight negative quarter; to fund the buildout, Alphabet issued 28.7 billion USD in senior unsecured debt and raised 12.4 billion USD through at-the-market stock sales. Google Cloud revenue grew 103% to 30.71 billion USD. In contrast, Microsoft reported revenue of 92.3 billion USD, up 19%, adjusted EPS of 4.89 USD above the 4.72 USD consensus, capex of 45.2 billion USD and positive free cash flow of 18.6 billion USD. Microsoft and Meta edged higher while Amazon slipped 2%.
- 3 Cash Flow Stocks To Watch In October 2026
US inflation reached 3.7% in September, driven by energy costs, which makes reliable cash generation more important for investors. The article covers three stocks screening as attractively priced on future cash flows, out of 92 additional companies the screen surfaced. Alphabet generates about $367.1 billion from Google Services and $77.6 billion from Google Cloud, where AI infrastructure and Vertex AI turn enterprise usage into recurring cash flows. Amazon's North America segment brings in about $453.7 billion and AWS $148.4 billion, with AWS growth reaccelerating to roughly 20% through 2025. The article notes that both companies' cash engines face a major AI infrastructure spending cycle that could reshape future margins.
- Zacks Investment Ideas feature highlights: Amazon, Alphabet, Meta Platforms and Nvidia
Amazon shares came under pressure after its Q3 report, with EPS of $1.89 missing the Zacks Consensus Estimate of $2.01 and revenue of $201.94 billion narrowly falling short of $202.11 billion. Operating income rose 61% to $28.1 billion, with a record operating margin of 13.9%. AWS revenue grew 39% year over year to $46 billion, its fastest growth in years, driven by AI infrastructure demand, while Amazon reaffirmed its $220 billion capex outlook for 2026. Free cash flow was negative $33.5 billion in the quarter. For Q4, Amazon guided to revenue of $240-$247 billion and operating income of $28.5-$33.5 billion; at under $250 a share, AMZN trades at 24x forward earnings versus the S&P 500's 19x, and carries a Zacks Rank #3 (Hold).
- Amazon: 3 Key Takeaways for Long-Term Investors
In its third-quarter 2026 earnings call on Oct. 29, Amazon CEO Andy Jassy said AWS could become a business with trillion-dollar annual revenue within five to 10 years. AWS revenue grew 39.3% year over year to an annualized run rate of $184 billion, and Jassy expects growth above 40% in 2027 and 2028. Same-day delivery of perishable groceries is described as lifting purchases across other categories, with shoppers buying nearly seven times more Everyday Essentials units. Amazon plans to sell its Trainium AI chips outside AWS in late 2027 after strong outside demand. Capital expenditures are expected to reach about $220 billion in 2026, and management says it is accelerating capex payback.
Related markets
Latest news
- Epidemic of Hacked Freezers Spreads Across Europe
In France, about 700 of 10,000 supermarkets were affected in October, and nine more countries reported refrigeration problems on Monday. France's CERT-FR links the compromises to remote controllers made by Danfoss and Copeland, and no group has claimed responsibility. Hackers forced a continuous defrost cycle, spoiling food and sparking fires at some stores, while units in Estonia were pushed to 50°C (122°F). Groupement Mousquetaires counted 300 affected stores, and Cooperative U said 80 of its 2,000 shops were hit. CERT-FR warns the campaigns are probably still ongoing, and Italy's government was set to hold a cybersecurity meeting on Tuesday.
- Securities firm issues surprising outlook for FPT
VCBS issues a cautious “Hard to compete” view on FPT, as generative AI is changing competitive advantages in the software outsourcing sector, even though Q3 2026 net revenue rose 12% to VND 13,754 billion and profit attributable to parent shareholders rose 11.8% to VND 2,723 billion. Q3 foreign technology revenue grew only 8.2% to VND 9,636 billion, with Japan up 8% to VND 4,270 billion, while nine-month new contract value rose 23% to VND 36,137 billion but converting contracts into revenue has slowed. In telecoms, nine-month revenue rose 17% to VND 16,699 billion, but cost of sales climbed 29%, narrowing gross margin by about 7 percentage points. Education revenue fell 5% in Q3, and VCBS forecasts a 5% drop to VND 5,825 billion in 2026 and another 5% decline to VND 5,534 billion in 2027.
- Pain for shareholders of FPT, Masan Consumer, SSI: Tens of thousands of billions of VND in market cap 'evaporate' since the start of the year
The 20 companies with the steepest market-cap declines on Vietnam's stock market lost a combined 622,748 billion VND between Dec. 31, 2025 and the start of trading on Nov. 3, 2026. FPT led with a 68,532 billion VND drop (42%), followed by Masan Consumer (down 62,473 billion VND, or 26.4%) and GELEX Electric (down 49,373 billion VND, or 54.9%). PNJ posted the steepest percentage decline at 75.9% (25,102 billion VND), while seven banks in the Top 20 accounted for about 184,377 billion VND. The article notes that market-cap changes reflect both share prices and changes in shares outstanding, so the decline does not equal cash actually withdrawn from the market.
- Foreign investors’ net selling since Vietnam’s market upgrade raises alarm
Since FTSE Russell upgraded Vietnam to secondary emerging market status on September 21, foreign investors have net sold nearly VND 30,000 billion on HoSE over about a month and a half, with only 3 of 32 trading sessions seeing no net selling, and year-to-date net selling reached nearly VND 121,000 billion as of November 3. The VN-Index has dropped more than 116 points (over 6%) since the upgrade, while average HoSE trading value has fallen to about VND 13,000 billion per session, one-third of a year earlier, as domestic cash flow stays thin amid high interest rates. The article remains optimistic on long-term prospects, citing stable macroeconomics, rising corporate earnings and a P/E near 12, and says foreign inflows could reverse soon.
- Over 21,000 billion VND poured into IPOs: More quality supply for the stock market
Six IPOs since early 2026 (DMX, HPA, LPS, HGI, F88 and DVV) have raised more than 21,000 billion VND in total. Điện Máy Xanh (DMX) raised over 13,300 billion VND, and although it did not sell all its shares (subscriptions reached 93% of the offering), its valuation above 100,000 billion VND (about USD 4 billion) makes it one of the most valuable non-financial companies to list since 2018. Unlike the 2017–2018 wave, which was mainly driven by banking, finance, consumer goods and real estate, this round includes retail, infrastructure and agriculture firms. The article also notes that many private conglomerates are listing subsidiaries to reflect the separate value of their business units. Highlands Coffee, CP Vietnam and Bảo tín Mạnh Hải are mentioned as having IPO plans.
- Company with VND 1.5 million billion in debt misses loan payment, roiling China’s credit market
Zhuhai Huafa Group, almost wholly state-owned and carrying interest-bearing debt of RMB 413 billion (VND 1.5 million billion), missed payments on two trust products and asked to extend some bank loans, triggering the sharpest selloff in China’s credit market in two years. Within two sessions to November 2, yields on benchmark Chinese corporate bonds rose 10.3 basis points, and the Huafa real estate unit posted a net loss of RMB 6.44 billion in the first nine months. Fitch placed Huafa on rating watch negative at BBB, while Huafa has since repaid one of the two delayed trust products. According to China Zheshang Bank, if Huafa keeps paying public bonds in full, the episode could be a temporary liquidity crunch, but extensions or restructuring could force markets to reassess risk across the state-owned enterprise sector.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.