Business Insights and Market Implications Summary

Microsoft Reclaims World's Most Valuable Company

• Microsoft surpassed Apple in market capitalization after a strong Q3 earnings report with 13% revenue growth, driven by cloud services, consumer products, and intelligent cloud segments like Azure.
• Microsoft is the best-performing Magnificent 7 stock this year, up 4%.
• Apple's stock is down 16% YTD, despite beating analyst estimates, due to tariff headwinds.
• Nvidia briefly held the top spot in January 2025 but faced challenges, including a price drop after Chinese startup DeepSeek's emergence and restrictions on shipping H20 GPUs to China.

Hyperscale Clouds Face Power and GPU Constraints

• Hyperscale clouds (AWS, Microsoft, Google) are constrained by megawatts, liquid-cooled racks, and GPU supply (primarily Nvidia and TSMC).
• $63B in collective CapEx wasn't enough to overcome power availability limits.
• Winners will secure sustainable energy, master GPU allocation, and create margin-accretive AI services.
• Hyperscalers logged 26% YoY growth in IaaS/PaaS revenue ($59B+).

Key KPIs for Public Cloud Providers

• All-in Public Cloud Revenue: Microsoft ~$42B, AWS $29.3B, Google $12.3B.
• Core IaaS/PaaS: AWS $29.3B, Azure ~$23B, GCP ~$6.1-6.2B.
• Operating Margin: AWS 39.2%, Microsoft (Intelligent Cloud) low-40s, Google Cloud high-17%.
• CapEx: Microsoft >$20B, AWS $24B, Google $17.2B (reaffirming $75B for the year).

Nvidia and Huawei Dynamics

• Nvidia's CEO expressed concerns that US chip restrictions could make Huawei chips more competitive in the AI market.
• Nvidia is complying with US restrictions and supports boosting American tech.
• Huawei is strong in computing, networking, and software, making them a formidable AI competitor.
• Nvidia cannot sell its H20 chips in China due to restrictions, while Huawei is preparing to ship Ascend 910C AI chips.

Satellite Images Reveal Huawei's Chip Intentions

• Satellite images suggest Huawei is designing advanced chips for phones and AI to circumvent U.S. restrictions.
• Huawei aims to develop a domestic AI supply chain from wafer fabrication equipment to model building.
• Nvidia's restricted H20 sales in China have allowed Huawei to sell more Ascend chips.

Lady Gaga Concert Attack Thwarted

• Police thwarted a bomb attack at Lady Gaga's free concert in Rio de Janeiro, which drew 2.1 million fans and was expected to inject $106 million into Rio's economy.
• The plot involved a hate speech group posing as fans to radicalize teenagers.

Scottish Mortgage Investment Trust (SMT) Analysis

• SMT shares have grown almost 50% in five years, recently jumping 10.5% in a month.
• SMT has significant exposure to US tech and holds 51 private companies (27.6% of assets).
• Top 30 holdings represent 80% of total assets, with SpaceX as the largest single holding at 7.8%.
• Holdings in Tesla and Nvidia have been trimmed, and SMT trades at a 10.4% discount to its net asset value.