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AI CapEx and Cloud Demand Propel Earnings Momentum

AI capex and cloud demand are driving late-October market momentum. Amazon (NASDAQ:AMZN) blew past Q3 estimates with AWS growth accelerating to roughly 20% and EPS of $1.95, sending shares up more than 10% in after-hours trade. UBS trimmed its price target on Airbnb (NASDAQ:ABNB) to $145, flagging traffic mix risks from ChatGPT adoption. Short term, strong cloud numbers are re-pricing Big Tech and lifting sentiment; long term, elevated AI spend suggests sustained capex cycles across data centers and chips. Globally, cloud tailwinds favor US hyperscalers and Asia suppliers; locally, discretionary and travel names face mixed sentiment as consumers recalibrate spending.

What’s Driving the Market?

Investors are centering on two dominant forces: AI-driven capital expenditure and consumer reopening dynamics. The AI story is concrete. Amazon reported AWS revenue growth above Street forecasts and signaled continued investment in AI infrastructure. That helped push AMZN sharply higher in extended trading and lifted related names across hardware and services.

Meanwhile, travel and lodging names are trading on recovery durability. Booking Holdings (NASDAQ:BKNG) posted a beat with double-digit bookings growth and a roughly 3.6% intraday rally. But sentiment is uneven: UBS’s move on Airbnb highlights how platform traffic changes and emerging AI interfaces could alter referral and direct-booking economics.

Sector Deep Dive — Cloud & AI CapEx

Standouts: Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT).

Amazon’s Q3 report showed $180.2 billion in revenue and EPS of $1.95, while AWS grew at near-20% year-over-year. Management flagged increased demand for AI services and guided Q4 sales slightly below consensus, yet the market rewarded the company for margin-accretive cloud growth. After-hours volume spiked as algorithmic and institutional desks reweighted exposure to AMZN.

Analysts have revised estimates upward on cloud profitability and AI services. Several broker comments noted higher capex plans for 2026, which supports semiconductor suppliers and data-center equipment makers. That re-rating compresses implied multiples for software peers while expanding those for hyperscalers with dominant cloud franchises.

Sector Deep Dive — Travel & Lodging

Standouts: Booking Holdings (NASDAQ:BKNG), Airbnb (NASDAQ:ABNB), Carnival (NYSE:CCL).

Booking beat expectations with double-digit growth in bookings and revenue, driving a near-term share lift. Airbnb faces a more complex read: UBS cut its price target to $145 from $148 and retained a Neutral rating, citing potential changes in web traffic as users adopt AI chat interfaces. The bank’s action signals investor caution on top-line durability and the margins that come from direct versus platform bookings.

Carnival’s market-cap decline of roughly $2.8 billion points to lingering sensitivity among institutional holders, even as occupancy and pricing trends show improvement. For travel names, macro variables — discretionary budgets, air fares, and regional reopening policies — remain key drivers of revenue mix and unit economics.

Sector Deep Dive — Retail, Restaurants & Local Commerce

Standouts: Chipotle (NASDAQ:CMG), Starbucks (NASDAQ:SBUX), DoorDash (NASDAQ:DASH), Home Depot (NYSE:HD).

Foodservice names show divergent flows. Chipotle’s shares fell more than 15% after a post-earnings pullback despite broker support from TD Cowen and BTIG, both of which maintained Buy calls. Starbucks produced mixed results: margins contracted on reinvestment and store closures, while same-store sales ticked positive for the first time in two years, producing a muted market response.

DoorDash’s partnership with Waymo for autonomous delivery in Phoenix underscores how logistics innovation could alter unit economics over time, but investors are focused on near-term revenue and margin impact. Home Depot’s technology investments in fulfillment and store tools continue to support faster deliveries and customer retention metrics, which underpins a steadier valuation premium versus peers.

Investor Reaction

Trading behavior shows tactical reallocations. Amazon’s after-hours surge—reports noted up to a 10–14% jump—drew sizable volume and pushed index futures higher into the close. That volume spike reflects both algorithmic response to beats and institutional appetite for durable cloud winners.

Tesla (NASDAQ:TSLA) exhibited the opposite tone: shares slipped on robotaxi timeline concerns, multiple recalls (including a recent Cybertruck recall of roughly 6,200 units for a light-bar hazard), and governance friction after CalPERS signaled opposition to CEO pay. Those developments pushed some institutional holders to reduce exposure, weighing on the EV complex and suppliers.

Analyst moves were a clear signal of differentiated risk pricing. UBS’s downgrade on Airbnb’s target and several maintained or reiterated ratings on names like Chipotle and Carvana (CVNA) indicate selective conviction—banks are backing long-term stories but trimming near-term valuations where traffic or macro risks are rising.

What to Watch Next

Over the next week to month, focus on three catalysts. First, follow capex guidance and cloud bookings from Big Tech in subsequent earnings and investor calls—any acceleration or pullback will change sector multiples quickly. Second, monitor traffic and conversion metrics from travel platforms; management commentary in Q3/Q4 calls (Airbnb, Booking) will clarify whether AI-driven discovery is denting direct bookings.

Third, watch governance and operational headlines at high-profile industrial-tech names. Tesla’s recalls and investor pushback on executive compensation could prompt volatility that spills into suppliers and EV peers. Also track analyst re-rates: further target adjustments from large brokers would materially affect flows into ETFs and active mandates.

Market participants should weigh short-term volume-driven repricings against the longer-term structural story of AI capex and a consumer that remains selective. Earnings commentary, guidance cadence, and policy noise will determine how quickly capital rotates between growth and cyclicals in coming weeks.

ABOUT THE AUTHOR

Sienna Whitaker

Sienna Whitaker spent twelve years advising brands on pricing and mix before moving to the markets desk, where she covers consumer staples and discretionary. At Trade Engine she focuses on basket inflation, elasticity, and channel shift, helping readers parse throughput, inventory health, and promotion cadence. Expect clear breakdowns of what same-store sales and traffic actually signal, how private label competes with legacy names, and which cohorts drive ticket size. Her analyses have been featured in retail conferences and trade publications, with frequent media guest spots during the holidays and back-to-school cycles. Sienna’s field work includes store walks and app-based user tests to validate claims made on earnings calls. Away from screens she is an avid home cook who tracks pantry inflation in her own kitchen, translating shelf checks into actionable context.