Morning Report | Hyperscaler cloud beats re-risk AI beta, long-end yields stay heavy
$AMZN cloud beats re-risk AI $AAPL hardware shortages cloud AI $TLT long-end pressure, Fed 3.5%–3.75% $USO Hormuz flows recover, premium choppy $FXY BOJ 8–1 hold, hawkish tilt
Market Pulse
AI
9 events
AI trade re-risks on hyperscaler cloud beats and capex persistence despite hardware shortages and rising model-safety scrutiny.
Latest Development
Amazon reported AWS Q2 revenue of $42.23B (+37% y/y) versus $40.54B expected, with AWS operating income $16.62B and 36.8% margin; it cited AI and in-house chips each above $25B annualized.
Apple guided current-quarter revenue growth of 9%–11% versus roughly 12% expected, attributing the gap to severe DRAM shortages and limited leading-edge foundry capacity; it raised Mac and iPad prices in June to offset memory costs.
Microsoft shares surged after fiscal Q4 results showed Azure growth of 43% and paid Microsoft 365 Copilot seats above 30M; management reiterated FY2026 capex and flagged potential expansion in FY2027.
Meta shares fell after guiding current-quarter revenue to $61B–$64B versus $63.15B expected; free cash flow dropped 91% y/y to $784M, and management said it is receiving offers to sell compute capacity at a premium.
Amazon lifted its 2026 capex forecast to about $220B from $200B, citing memory price inflation; management said capacity still will not meet 2026–27 demand, with AWS backlog cited at $496B and trailing free cash flow at -$7.6B.
U.S. semis rebounded on the cloud/capex reset as SOXX rose about 8%; Lam gained ~18% and Micron ~18%, while Samsung warned the memory crunch could last into 2028 and Arm rose ~7% on in-house chip demand commentary.
Nexus Data Centers is in advanced talks for roughly $15B of financing for an Anthropic-focused AI campus in Texas, with Morgan Stanley leading and a Google credit backstop for Anthropic discussed as a potential structure feature.
Anthropic disclosed three internal-test incidents where Claude models gained unintended internet access and entered real organizations’ systems due to a configuration error; separately, IBM set a 2028–2029 quantum earnings-impact target alongside “quantum advantage” research and a CHIPS-backed foundry plan.
Market reaction
Risk-on AI price action was pronounced: MSFT rose ~15% and META fell nearly 8%, SOXX gained ~8% with MU and LRCX up ~18%; premarket AMZN was up ~12% while AAPL was down ~7%, and Asian semis rallied with SK Hynix ~+30%, Samsung ~+27%, and TSMC ~+10%.
Our view
Continued AI infrastructure spending intensity favoring hyperscaler cloud leaders and upstream semis, with supply-constrained components shifting the debate from demand to delivery timing and pricing power. Key monitor is whether memory and leading-edge capacity constraints persist into 2026–27 while capex plans remain intact.
What could change our view
Hyperscalers signal a capex plateau or cuts, reviving “AI spend peak” fears.
Supply constraints broaden, causing shipment delays and margin pressure across devices and cloud.
Tickers: $AMZN, $AAPL, $MSFT, $SOXX
U.S.-Iran War
4 events
Drone-claim escalation collides with partial Hormuz flow recovery, keeping crude risk premium choppy and energy equities split into earnings-driven winners and losers.
Latest Development
Iran claimed drone strikes on U.S. bases in Kuwait and Bahrain, citing hits to shelters, communications, storage, generators, navigation and support sites, while U.S. forces said Wednesday strikes hit “dozens” of IRGC targets nationwide.
Maritime spillovers widened as reports cited shipping and infrastructure attacks; Egypt said a drone hit two ships at Damietta port Thursday, causing a fire, with responsibility unclaimed.
WTI Sep was about +0.1% at $83.68 and Brent Sep about +0.35% at $89.34 after earlier declines; CBA estimates Hormuz traffic recovered to ~30%–35% of pre-war levels.
Chevron Q2 adjusted EPS of $6.06 beat consensus by $0.50 with shares indicated ~+1% premarket, while Exxon adjusted EPS of $3.52 missed by $0.08 with shares indicated ~-2%.
Market reaction
Crude steadied with WTI Sep around $83.68 (+0.1%) and Brent Sep around $89.34 (+0.35%) as investors tracked improving Hormuz flows; in premarket single-name energy diverged with CVX ~+1% and XOM ~-2% on earnings.
Our view
The oil war premium continues to compress as transit volumes normalize, keeping crude roughly rangebound near current levels while energy equity moves lean more on earnings dispersion. The next decisive swing is verified Hormuz throughput/insurance conditions alongside confirmation of any material base, shipping, or infrastructure damage.
What could change our view
Confirmed sustained disruption of Hormuz flows or tanker interdictions re-widens crude premium.
Verified escalation from U.S. base damage or broader strikes lifts infrastructure risk sharply.
Tickers: $XLE, $USO, $CL=F
Macro & Policy Digest
Long-end Treasuries stay under pressure as the Fed holds 3.5%–3.75% amid mixed growth and sticky core inflation.
Latest Development
Fed held the policy range at 3.50%–3.75% in a 9–3 vote; Q2 GDP printed 1.5% vs 1.8% expected, while core PCE was 0.1% m/m and 3.3% y/y.
Market reaction
The 30-year yield jumped about 6 bp after the Fed decision and held above ~5.2% near 2007 highs, while the rest of the curve was little changed.
Our view
Long-end yields stay above 5% near term, keeping duration (TLT) biased lower even if front-end steadies. Watch whether upcoming data or Fed communications reinforce expectations for additional hikes this year and whether forward real yields continue to fall alongside higher nominal long-end yields.
What could change our view
A decisive reversal in long-end yields back below 5%.
Fed turns more dovish, signaling no further hikes despite 3.3% core PCE.
Tickers: $TLT
Chilean winter storms hit key copper mines, adding supply risk to an already tight inventory backdrop and keeping prices bid.
Latest Development
Severe snow, flooding, and winds disrupted Chilean copper operations: Antofagasta halted Los Pelambres, Lundin said Caserones restart may take 2–3 weeks after damaged power lines, and Barrick evacuated staff.
Market reaction
Copper rallied, with three-month LME copper cited around $13,750/ton as disruptions in a major producing region reinforced the tight visible-inventory narrative.
Our view
Maintain a constructive bias on copper as near-term supply uncertainty and tight visible inventories keep upside skew. Key monitor is whether Caserones and Los Pelambres normalize on the stated timeline versus extending outages and tightening balances further.
What could change our view
Faster-than-expected restarts at Caserones and Los Pelambres reduce outage premium.
Visible inventories rebuild materially, including release of US-held stocks.
Tickers: $HG=F
BOJ holds 1% policy rate on 8–1 vote as it leans hawkish on 2H FY2026 inflation, keeping JPY intervention and hike timing in focus.
Latest Development
• BOJ kept policy rate at 1.0% (8–1) with Takata dissenting for a 25 bp hike; it projected core inflation “clearly above” 2% from 2H FY2026 amid wage, oil and weaker-yen pressures.
Market reaction
USD/JPY swung from around 163 to as low as 157.96 amid reported Tokyo intervention and a U.S. “rate check,” highlighting sensitivity near the 162–165 zone.
Our view
BOJ remains on a gradual tightening path, but the hawkish inflation forecast and dissenter keep risk skewed toward an earlier-than-six-month cadence. Watch September/October meeting messaging and any renewed USD/JPY stress near 162–165 for confirmation.
What could change our view
Core inflation fails to firm, undermining the case for earlier hikes.
Sustained USD/JPY stability removes pressure for intervention and policy urgency.
Tickers: $FXY
China July PMIs slump back into contraction as domestic demand softens and typhoon disruptions hit, raising pressure for faster policy support.
Latest Development
Official manufacturing PMI fell to 49.2 in July from 50.3, below 50.0 consensus; new orders slid to 48.5, while construction (47.0), services, and composite (49.3) gauges also weakened.
Our view
The PMI downdraft reinforces a soft domestic-demand backdrop, keeping China risk assets biased toward policy-dependent trading rather than self-sustaining growth. Monitor whether promised faster follow-through after the Politburo meeting stabilizes orders and broad activity in coming prints.
What could change our view
Subsequent PMIs rebound without meaningful stimulus, reducing expectations for added support.
Further deterioration in orders and services extends contraction beyond weather-related disruptions.
Tickers: $FXI
Gaza disarmament deal headlines hit oil-risk radar as verification gaps and phased conditions keep Mideast geopolitics binary for crude.
Latest Development
President Trump said an agreement was reached for complete Hamas and other Gaza armed-group disarmament, but Hamas has not confirmed and Palestinian Islamic Jihad called the reports inaccurate.
Our view
Treat the announcement as headline risk rather than a de-risking catalyst for crude until verification and written terms arrive. We stay neutral on near-term geopolitical premium, watching for the promised conditions within ~two weeks and any confirmation from Hamas or implementation committee milestones.
What could change our view
Hamas confirms and credible verification framework emerges, compressing oil’s risk premium.
Breakdown in talks or escalatory security incident revives broader regional disruption fears.
Tickers: $CL=F
Company Events
Cyclospora-linked lettuce fears are hitting restaurant traffic near-term while Chipotle lifts 2026 comp outlook and Yum flags Taco Bell recovery from mid-July trough.
Latest Development
Chipotle raised its 2026 same-store sales outlook to low single digits after a Q2 beat, saying late-July cyclospora fears cut sales by roughly 2 points despite California lettuce sourcing.
Yum said Taco Bell U.S. Q3-to-date comps are down about 2% through July 27 tied to an FDA-cited iceberg lettuce link, with trends improving and the last four days’ sales ~50% recovered from the trough.
Market reaction
YUM rose about 3% on management’s recovery commentary, after being roughly down 5% since the FDA-linked disclosure.
Our view
Treat the cyclospora episode as a near-term demand shock with improving trajectories, leaving underlying brand momentum and guidance as the main drivers. Next to watch is whether traffic and sales trends continue to normalize into early August as social sentiment stays stable and supply-chain actions limit further disruption.
What could change our view
New cyclospora headlines or broader recalls extend traffic declines beyond current recovery pace.
Perception shifts from “industry-wide” to brand-specific, impairing comps beyond guided impacts.
Tickers: $CMG, $YUM
Autos/EV sees company-level divergence as Rivian tightens spend and losses while supplier Schaeffler resets 2028 revenue expectations on weaker demand.
Latest Development
Rivian cut 2026 capex to $1.7–$1.8B and narrowed adjusted loss guidance to $1.8–$2.0B, while reiterating 65k–70k deliveries and reporting Q2 gross profit of $179M.
Schaeffler lowered its 2028 sales target to €24–26B and cut E-Mobility sales to €6.25–7.25B with margin -4% to 0%, citing reduced passenger and light-vehicle market expectations.
Our view
Investor focus stays on execution and demand durability, with EV OEMs rewarded for tighter cash discipline while suppliers face de-rating risk from volume resets. Monitor whether Rivian sustains delivery trajectory alongside spend efficiencies and whether Schaeffler can hit reiterated 2028 margin and cash targets despite lower sales.
What could change our view
Rivian delivery slippage undermines cash discipline narrative and loss guidance credibility.
Broader passenger/light-vehicle demand weakens further, forcing additional supplier target resets.
Tickers: $RIVN, $CARZ
Reddit’s ad-led beat and raised Q3 guide are being overshadowed by choppy Google search referrals, raising traffic durability concerns for the platform.
Latest Development
Reddit fell about 11% post-earnings despite 61% y/y Q2 revenue growth, higher net income and free cash flow, and Q3 revenue/adjusted earnings guidance above consensus amid “choppy” search referrals.
Market reaction
Reddit shares fell about 11% after the print as investors focused on volatility in search-driven traffic despite beats and upside Q3 guidance.
Our view
Near-term RDDT trading is driven more by confidence in traffic sourcing than by headline beats or guide. Monitor whether search referral volatility stabilizes and whether key partner dynamics (Google/OpenAI licensing) remain supportive of monetization and user growth.
What could change our view
Sustained deterioration in Google-driven referrals pressures DAU growth and ad pricing.
Ad demand softens, undermining the ability to deliver guided Q3 revenue and earnings.
Tickers: $RDDT
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