Why Are Amazon, Apple, and Nvidia Moving Markets?

TL;DR

Amazon and Apple lifted US stock futures after strong results and encouraging forecasts, with Amazon’s cloud growth and Apple’s holiday outlook supporting sentiment. Nvidia expanded partnerships in South Korea while Jensen Huang expressed hope that Blackwell chips could eventually reach Chinese customers, although the company had not sought the required US permission and no decision had been made.

Transcript

KRITI: GOOD MORNING FROM LONDON. I AM KRITI GUPTA ALONGSIDE TOM MACKENZIE. ASIAN LEADERS MEETING IN THE APEC SUMMIT AND SOUTH KOREA, WHERE NVIDIA CEO JENSEN HUANG IS EXPECTED TO SPEAK. WHEN HE DOES, WE WILL BRING YOU THOSE HEADLINES LIVE. OFF THE BACK OF THE U.S. CHINA TRADE NEGOTIATIONS, CHINA BUYS MORE U.S. SOYBEANS BUT EXPORTERS ARE STARTING TO ... Read More

Key Insights

• Amazon’s cloud business grew by about 20% to $33 billion in revenue, marking its strongest growth rate in almost three years. Because AWS is described as Amazon’s key profit driver, the acceleration supported a strong positive market reaction to the company’s earnings.
• Amazon’s artificial intelligence investments are producing identifiable commercial opportunities. Andy Jassy said Amazon’s chatbot could add $10 billion in annual sales, while a call-center product was on track to generate $1 billion in revenue, offering investors specific examples of potential returns.
• Apple’s outlook remained upbeat despite tariff expenses and challenges in China. The company was absorbing $1.1 billion in tariff costs, expected a strong holiday season, and anticipated improvement in China after reporting a larger decline there than analysts had forecast.
• Apple’s services business accounts for 30% of revenue, reducing its dependence on hardware alone. Services mentioned in the discussion included AppleCare and customer support, while iPhone demand and expectations for holiday sales continued to shape the near-term outlook.
• Nvidia’s South Korean strategy combines national infrastructure commitments with corporate partnerships. Samsung and Hyundai were linked to its expansion, while South Korea’s sovereign artificial intelligence plans included data centers equipped with GPUs based on Nvidia’s Blackwell design.
• Nvidia’s ability to sell Blackwell chips in China remained uncertain. Jensen Huang said he hoped such sales could happen someday, but Nvidia had not applied for Washington’s required permission and no decision had been made about access under existing export controls.
• China’s manufacturing economy showed sustained weakness, with factory orders experiencing their longest slowdown streak in nine years. New export orders were particularly soft, while the domestic economy remained constrained by the property slump and weak consumer confidence.
• US-China trade tensions were eased but not resolved. China received a 10% reduction in fentanyl-related tariffs, rare-earth export controls were delayed for one year, and Chinese manufacturers continued developing supply chains in countries such as Vietnam to prepare for future volatility.

Questions & Answers

Q: Why did Amazon’s earnings lift US stock futures?

Amazon’s earnings improved market sentiment because its cloud unit grew by about 20% to $33 billion in revenue, its fastest growth rate in almost three years. AWS was identified as Amazon’s key profit driver. Management also gave concrete examples of artificial intelligence producing commercial returns, including a chatbot that could add $10 billion in annual sales and a call-center product approaching $1 billion in revenue.

Q: How is artificial intelligence contributing to Amazon’s business?

Amazon described artificial intelligence as an operational and commercial tool rather than only a source of infrastructure spending. Andy Jassy said the company’s chatbot could contribute $10 billion in annual sales, while its call-center product was on track to bring in $1 billion in revenue. These examples helped address investor questions about whether Amazon’s spending on artificial intelligence and data centers could produce measurable returns.

Q: Why were investors optimistic about Apple’s outlook?

Investors responded positively to Apple’s revenue performance and its forecast for a strong holiday sales period. The company expected better results in China and maintained an upbeat sales projection even while absorbing $1.1 billion in tariff costs. Apple also receives 30% of its revenue from services, providing a substantial business alongside hardware, although fierce competition and a larger-than-expected decline in China remained concerns.

Q: What challenges does Apple face in China?

Apple faces fierce competition and weakening recent performance in China. The discussion noted that the company reported a decline in China that was larger than forecast, even as management expected the business to improve. Apple is also managing $1.1 billion in tariff costs and was described as not leading in artificial intelligence, but it nevertheless projected stronger sales and anticipated a strong holiday season.

Q: Can Nvidia sell Blackwell chips to customers in China?

Nvidia could not yet count on selling Blackwell chips to Chinese customers. Jensen Huang said he hoped the company could make such sales someday, but he also said that no decision had been made. Nvidia had not applied for Washington’s permission, which was required under the export controls described in the source. The outcome therefore depended on future regulatory decisions and company action.

Q: How is Nvidia expanding its business in South Korea?

Nvidia is expanding in South Korea through corporate partnerships and national artificial intelligence infrastructure. Samsung and Hyundai were identified as partners, while South Korea was making commitments to build sovereign artificial intelligence capacity and data centers containing GPUs based on Nvidia’s Blackwell design. Huang also emphasized Nvidia’s computing libraries, which support applications ranging from computational lithography and robotics to molecular dynamics and artificial intelligence.

Q: Why is China’s manufacturing economy under pressure?

China’s manufacturing sector was pressured by weak factory orders, soft new export orders, and limited domestic demand. Factory orders recorded their longest slowdown streak in nine years, and analysts expected the weakest factory-output performance since the COVID-19 lockdowns. The continuing property slump also weighed on consumer confidence and domestic purchases, even as manufacturers found export markets beyond the United States.

Q: How did the US-China trade talks affect the market outlook?

The talks provided near-term relief without eliminating long-term uncertainty. China received a 10% reduction in fentanyl-related tariffs, and planned rare-earth export controls were delayed for one year, benefiting the United States and other trading partners. China also bought more US soybeans. However, exporters remained wary of future disruptions, and Chinese manufacturers continued building supply chains in countries such as Vietnam to manage further volatility.

Summary & Key Takeaways

• US stock futures advanced as investors responded positively to Amazon and Apple. Amazon’s cloud unit produced its fastest growth in almost three years, while management provided examples of artificial intelligence generating business returns. Apple reported better revenue and projected strong holiday sales despite tariff costs and competitive pressure in China.

• Nvidia strengthened its South Korean relationships through partnerships involving Samsung and Hyundai, sovereign artificial intelligence, data centers, robotics, and accelerated computing. Jensen Huang described Nvidia’s software libraries as tools for applying accelerated computing across fields including computational lithography, quantum physics, molecular dynamics, fluid dynamics, robotics, and artificial intelligence.

• China remained central to the market outlook after trade negotiations produced tariff relief and delayed rare-earth export controls. However, weak factory orders, soft new export orders, a continuing property slump, and limited domestic confidence pointed to economic pressure. Manufacturers were also preparing supply chains for further long-term trade volatility.