After late-October earnings reports, shares of Amazon and Alphabet sold off, and the author believes the market is missing the bigger picture for both. Google Cloud's revenue grew 103% in the third quarter, lifting Alphabet's overall growth to 25%, yet the stock fell over 10% the day after earnings. AWS grew 39% and accounts for 63% of Amazon's operating profit, so faster AWS growth should lift operating profit faster than revenue. Nvidia told investors to expect 70% revenue growth in 2027 following its second-quarter report, while trading at 26 times trailing earnings and 13 times next year's earnings. The author argues that if Nvidia returned to its current 26 times earnings level, the stock would need to double.
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