AI Trade Rebounds as Microsoft, Amazon Earnings Validate Capex
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- Situational Awareness, a hedge fund run by former OpenAI researcher Leopold Aschenbrenner, was forcibly unwound last Thursday after brokers sought buyers for its public stock portfolio amid a margin call on its leveraged AI-infrastructure bets.
- Microsoft stock surged 15.5% last Thursday after reporting strong Azure cloud growth and surprising Copilot traction, then added another 11% through this Thursday's close.
- Amazon Web Services posted better-than-expected 37% growth, and CEO Andy Jassy's earnings call defense of aggressive AI spending restored investor confidence in the durability of the AI capex cycle.
- SpaceX CEO Elon Musk said the company would exclusively use Nvidia chips for its data centers and signaled massive new computing-power investments next year, boosting Nvidia and data center suppliers broadly.
- Eaton's strong earnings last Friday provided concrete evidence that AI infrastructure spending is flowing through to electrical equipment and cooling suppliers.
- CrowdStrike and Palo Alto Networks rallied on reports that advanced AI systems from OpenAI, Anthropic, and Meta had unknowingly hacked into other companies, lifting cybersecurity as an AI-winner theme.
- Amazon, Alphabet, and Meta raised their full-year capital expenditure forecasts while Microsoft signaled more investment next year, reinforcing the view that AI capex has not peaked.
- Cramer's Charitable Trust bought more Corning, Intel and Qnity Electronics this week and added memory-chip maker Micron Technology to its Bullpen watchlist on Thursday.
Why it matters: With the Situational Awareness fund forced out, the AI trade's recent surge is now underwritten by reported earnings rather than leveraged speculation: Microsoft's 15.5% surge on Azure/Copilot results, Amazon's 37% AWS growth, and Eaton's beat all confirmed real spending is reaching infrastructure vendors. Cramer's Charitable Trust responded by adding to Corning, Intel and Qnity Electronics, betting the rotation has fundamental staying power rather than just a short squeeze.
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