🅰️ The A’s have it

Two of the most consumer-facing members of the Magnificent 7 released earnings last night, and it seems like they’re doing pretty swell. 

First out of the gate was Amazon, which had a quarter for the record books:

• The company posted $180.2 billion in sales for Q3, growing 13% from the same quarter a year earlier. 

• Earnings per share came in at $1.95, blowing past analysts’ expectations of $1.57.

• Amazon’s AWS cloud business saw revenue jump 20% year on year to $33 billion, powered by huge demand for AI. 

• Amazon added 3.8 gigawatts of computing capacity, advertising revenue was up 24% year on year, and subscription revenue was up 11% year on year.

Meanwhile, down the coast in Cupertino, the numbers out of Apple were less of a bonanza but left Wall Street admiring how it managed to pull off its top-line numbers with the myriad forces working against it.

• The company’s iPhone sales were $49 billion, shy of the analyst consensus forecast of $50.1 billion.

• China sales were a disappointing $14.5 billion, below analysts’ expectation of $15.5 billion.

• While it’s been a laggard in AI, Apple’s Services division saw revenue of $28.8 billion, slightly above the Street’s $28.2 billion.

• And despite all that, the company pulled a rabbit out of a hat: revenue for the fourth quarter was $102.5 billion, slightly above the $102.2 billion analysts had predicted. A win is a win!

The Takeaway

Amazon gave guidance for fourth-quarter sales between $206 billion and $213 billion, compared with estimates of $208.4 billion. Operating income was forecast at $21 billion to $26 billion, topping Wall Street’s expectation of $19.73 billion. As for Apple, its stock was recently propelled above a $4 trillion market cap, in part by leading indicators that suggested iPhone 17 sales were ahead of last year’s model.

The real test for both then? Ho- Ho- How are they going to do in the winner-take-all holiday season?

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The largest health insurers in the country all reported adjusted earnings per share that beat Wall Street estimates this earnings season, but you wouldn’t know it by looking at their stock prices.

So what’s the issue?

• Investors remain weary as insurers like UnitedHealth, Cigna, CVS, Elevance Health, and Centene continue to grapple with high costs of medical care, particularly for government-sponsored plans.

• “Medical cost trends remain historically high, but consistent with our second-quarter guidance, and we expect that to continue throughout the remainder of 2025,” UnitedHealth CEO Tim Noel said on the company’s earnings call.

• Medical costs outpaced premiums as members are getting more procedures and taking more expensive drugs, and for government-sponsored plans like Medicaid and Medicare, reimbursement hasn’t kept up with those rising medical costs, which is hitting providers like Molina particularly hard.

While Molina CEO Joe Zubretsky said he considers the trend in costs as “inclement weather rather than climate change” and expects margins to stabilize in 2026 and recover in the coming years, from everything we’ve seen in our own experience with the healthcare industry, costs go only one way: up. 

The Takeaway

Every major health insurer is down since reporting its third-quarter earnings except for Centene. It seems like Humuna and Oscar Health, which report next week, could suffer the same pessimistic diagnostic from the market. 

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Meta dove because it isn’t Google or Microsoft

Three giant tech companies reported earnings Wednesday, all claiming that their record revenue came courtesy of AI. And all said their spending to furnish AI would continue to grow. One stock soared, one ended Thursday down 3%, and one got hammered by analysts and plummeted more than 11%.

What Meta is missing

• 🏈 College Football: Traders are eyeing a couple of games this weekend, pricing a Georgia win over Florida at the Cocktail Party at $0.73. Later that night, the matchup between No. 18 Oklahoma and No. 14 Tennessee has also attracted attention, and the market’s pricing in a 58% chance of the Volunteers taking that one.

• 🏈 NFL: This Sunday has severale great games lined up, with the most interesting of the afternoon games shaping up to be Chicago at Cincinnati, with the market pricing a Chicago win at 58%. The market for the Seahawks-Commanders Sunday night matchup is favoring Seattle, with 61% odds on Robinhood’s* markets.

• ⚾️ MLB: The World Series is heading back to Toronto for Game 6, but the market still loves these Dodgers despite the Blue Jays leading the series 3-2. Robinhood’s prediction market is giving LA a 58% chance of winning the decisive game.

*Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company. Event contracts trading is offered by Robinhood Derivatives, LLC, a registered futures commission merchant with the CFTC.

• OpenAI is preparing for an initial public offering that could value the company as high as $1 trillion

• US President Trump and Chinese President Xi agreed on rolling back curbs of rare earths and reducing tariffs, but the pair didn’t talk about “super duper” chips

• Microsoft: Forget what we said, we are going to keep spending on capex

• As expected, Core Scientific shareholders voted against the acquisition by CoreWeave