LikeFolio Weekly Roundup

Earnings season is in full swing – and Google (GOOGL) and Amazon (AMZN) just delivered two of this week's biggest reports.

Google doubled its cloud revenue. Wall Street knocked more than 10% off its stock anyway.

Amazon posted its fastest cloud growth in nearly five years. And Tesla (TSLA) is getting closer to a future where your car can earn money while you're at work.

Our LikeFolio data remains firmly bullish on all three.

Here's what caught our attention this week.

Infinite Hold Updates

Google (GOOGL) Shares Sink 10% as AI Demand Surges

Google Cloud just doubled its revenue in a single year.

And Wall Street responded by sending shares down more than 10%.

The selloff followed Wednesday's earnings report, where Alphabet missed Wall Street's revenue and earnings estimates. Its core search business grew revenue 12% to $63.4 billion, down from 17% growth the prior quarter. YouTube ad sales also fell short of expectations.

The company spent $51.4 billion on new equipment and infrastructure during the quarter, pushing free cash flow – the cash left after those investments – to negative $9.1 billion.

And management expects spending to climb even higher in 2027.

Investors are starting to question how long Google can keep spending at this pace.

But we're already seeing some enormous returns from those investments.

Google Cloud revenue surged 103% to $30.7 billion. Operating profit more than tripled to $11.1 billion.

The division also has roughly $560 billion in contracted business waiting to be delivered. Management expects to turn more than half of that into revenue over the next two years.

Demand for Google's AI services is exploding.

The Gemini app has reached 1 billion users, making it the fastest-growing product in Google's history.

And despite fears that AI will replace traditional search, Google reported its strongest year-over-year growth in search queries in five years.

Of course, more searches need to translate into more ad revenue. That's an area we'll be watching closely.

But across the company, total revenue still climbed 25% to $127.6 billion. Operating profit jumped 30%.

And our LikeFolio data remains firmly bullish.

Alphabet currently earns a strong bullish LikeFolio Score of 87 out of 100.

It also carries a +25 divergence, putting it in our Undervalued range.

In other words, the strength we're seeing on Main Street is running well ahead of Wall Street's expectations.

We love finding that kind of gap after a stock gets beaten down.

Google still has to prove it can turn growing search traffic into more ad dollars and get a solid return on its massive AI investments.

But with cloud revenue doubling, Gemini reaching a billion users, and our consumer data still flashing bullish, we see good reason to stick with Alphabet.

Our long-term outlook remains bullish.

Amazon (AMZN): AI Growth Hits a Five-Year High

Amazon's cloud business just posted its fastest growth in nearly five years.

Amazon Web Services (AWS) revenue surged 39% to $46 billion in the third quarter, up from 20% growth a year ago.

And profits climbed even faster.

AWS operating income jumped 55% to $17.8 billion as businesses continued pouring money into AI.

Amazon also announced new AWS agreements with Meta (META), Nvidia (NVDA), and OpenAI.

Spending by Fortune 500 companies on Amazon Bedrock – which helps businesses build and run AI applications – has jumped nearly sevenfold over the past year.

CEO Andy Jassy expects AWS revenue growth to exceed 40% in both 2027 and 2028.

That's a bold forecast for a business already generating $184 billion in annual revenue at its current pace.

Amazon's retail business is also making more money.

North American operating profit jumped 82% to $8.7 billion.

Amazon delivered more than 1.5 billion items the same day or overnight during the quarter – its fastest third-quarter delivery speeds ever.

Online store sales grew a modest 2%, while advertising revenue climbed 11%. The shift of Prime Day into the second quarter weighed on both comparisons, and management expects advertising growth to pick up in the fourth quarter.

Across the company, revenue climbed 12% to $201.9 billion, while operating profit surged 61% to $28.1 billion.

Amazon's 13.9% operating margin was its highest ever.

And Amazon is investing heavily to keep that growth going.

The company expects to spend roughly $220 billion on capital projects this year, much of it to expand its AI infrastructure.

It's an enormous investment. And it's pushed free cash flow – the cash left after major investments – to negative $42.4 billion over the past 12 months.

But Amazon has good reason to keep building.

AWS revenue growth has now accelerated for five straight quarters. Its profits are climbing right alongside it, and management expects demand to keep growing over the next two years.

Our LikeFolio data supports that optimism.

Amazon currently earns a strong bullish LikeFolio Score of 86 out of 100.

We're encouraged by the pace of growth at AWS, especially as Amazon's retail business continues to generate more profit.

The company is spending aggressively to capture what it sees as a massive long-term AI opportunity. And the latest results give us good reason to believe those investments are paying off.

We're staying bullish on AMZN.

Tesla (TSLA): The Next iPhone Moment Is Taking Shape

Imagine driving your Tesla to work, then sending it out to pick up paying passengers while you sit at your desk.

By the time you're ready to head home, your car has earned money for you.

Tesla wants to make that possible as soon as next year.

On its October 21 earnings call, Tesla AI chief Ashok Elluswamy said the company expects to start adding customer-owned vehicles to its Robotaxi fleet around the second quarter of 2027.

And Tesla's Cybercab is already carrying paying passengers in Austin.

We believe this could change the way people think about owning a car.

Consider what happened when Apple (AAPL) introduced the iPhone in 2007.

Before that, most Americans picked their wireless carrier first, then chose from the phones it offered.

The iPhone flipped that relationship. Suddenly, people were choosing their phones first – and switching carriers to get them.

Tesla could do something similar with self-driving technology.

In fact, we're already seeing signs of that shift.

Tesla finance chief Vaibhav Taneja said customers are coming into showrooms asking to try Full Self-Driving (FSD) software before choosing a vehicle.

Last quarter, more than three out of four North American buyers signed up to pay for FSD when they took delivery of their Teslas.

And our consumer data shows interest is picking up.

Tesla's website traffic is up 32% year over year, while social media posts signaling purchase intent have climbed 17% over the four weeks through October 24.

In September, the Model Y became Germany's best-selling car, knocking the Volkswagen Golf from its longtime top spot. It also led sales in China and across Europe.

For a company that faced serious brand backlash just a year ago, that's a remarkable comeback.

And our LikeFolio Score remains firmly bullish at 77 out of 100.

Of course, Tesla still needs to prove it can put customer-owned vehicles to work on its Robotaxi network. The rollout will be a major test.

But consumers are already showing strong interest in Tesla's vehicles and its self-driving software.

We've held Tesla on our Infinite Hold list since April 2018, and the stock has gained more than 1,800% since.

We believe the shift toward self-driving cars could create another enormous opportunity.

Tesla stays on our Infinite Hold list. And we're as bullish as ever.