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Today’s Headlines
AMAZON WATCH
Amazon Posted Its Highest Operating Margin Ever. The Stock Fell on the Forecast.
Amazon (AMZN) had the most profitable quarter in its history. Investors traded it as a disappointment. Net sales rose 12% to $201.94 billion, just under the roughly $202.1 billion analysts expected. Earnings were $1.89 a share, against an LSEG estimate of $1.96. Operating income was $28.1 billion, a margin of 13.9%, which the company called its "highest operating margin ever."
Amazon Web Services grew 39.3% to about $46 billion, and its operating income rose about 55% to roughly $17.8 billion. Chief Executive Andy Jassy projected AWS revenue growth of more than 40% in both 2027 and 2028.
The forecast set the tone. Amazon expects fourth-quarter sales of $240 billion to $247 billion, with a midpoint below the roughly $244.3 billion analysts expected. The $31 billion midpoint of its operating-income range compares with an estimate of about $33 billion. Free cash flow over the past 12 months was an outflow of $42.4 billion, after a $94.8 billion rise in spending on property and equipment. The shares were about 7% lower early Friday, then recovered much of that and closed Friday down about 1.4% at $240.35.
Investor Signal
Amazon's operating margin hit a record, and investors judged the cash instead. A record margin and cloud growth near 40% did not offset a forecast midpoint under estimates and a year of negative free cash flow. Jassy has indicated that 2027 capital spending will be meaningfully higher. If AWS growth holds above 40%, the spending reads as capacity customers want. The 2027 spending figure, when Amazon provides one, is the next test.
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MEMORY WATCH
Sandisk's Revenue Nearly Quintupled and It Announced an 8-for-1 Split. The Stock Fell Anyway.
Sandisk (SNDK) reported fiscal first-quarter revenue of $11.03 billion, up 378% from a year earlier and 23% from the previous quarter. Revenue beat the roughly $10.7 billion forecast. The gross margin was 85%. Adjusted earnings were $49.51 a share, above the $47.15 analysts expected. Datacenter revenue rose 61% from the prior quarter to $4.80 billion, and adjusted free cash flow was $5.7 billion.
Sandisk expects fiscal second-quarter revenue of $12.2 billion to $12.6 billion, against an estimate of $12.23 billion. It guided adjusted earnings to $55 to $57 a share. It also announced an 8-for-1 stock split, effective Nov. 19, with split-adjusted trading from Nov. 20.
The shares closed at $1,330.05 on Thursday, down 5.32% before the results as chip stocks fell. They slipped another 4.1% in extended trading. On Friday they closed down about 13.4% at $1,151.43. The guidance midpoint is only about 1.4% above the estimate. That was a small step for a company whose revenue nearly quintupled in a year, on a night when Intel and Amazon pulled the chip group lower.
An 85% gross margin reflects memory prices well above production costs. The debate is how long that pricing lasts.
Investor Signal
Memory makers are being paid extraordinary prices, and investors are asking how long they last. Datacenter revenue grew 61% in a single quarter, and guidance points higher again. With margins at 85%, there is little room left to improve. In a cyclical business, pricing can turn quickly once supply catches up. The second-quarter gross margin and the Nov. 19 split are the next tests.
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Rates Just Reset. Who Feels It First?
On January 2, the 10-year yielded 4.19%. By September 30, 5.29% — most of it in one quarter.
Some companies earn from higher rates. Some pay. Each runs on a different clock.
We traced three: IBKR, WRB and FIS. One has already reported. The other two report next, and the report tells you the exact line to check.
Free report, texted to your phone.
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