Winners and Losers of Big Tech Earnings

TL;DR

1. Amazon’s Project Kuiper takes off, with 1,600 Satellites due in 14 months 

2. Amazon, Meta, Microsoft, and Apple report earnings 

3. Student loan collections resume after five-year pause

Amazon Enters the Satellite Race, Playing Catch-Up to Starlink

Amazon has launched 27 satellites for Project Kuiper, marking the first step in its push to challenge SpaceX’s Starlink. The goal: deploy over 3,200 satellites and begin delivering internet service by the end of the year.

But Amazon’s clock is ticking. Under its FCC license, it must deploy half its constellation — about 1,600 satellites — in just 14 months. It took SpaceX about 18 months to launch its first 1,600 Starlink satellites. 

Starlink has already established a dominant position with a 62% market share of all active satellites in orbit. It is on track to generate $12.3 billion in 2025 revenue (up 57% YoY), with a 61% EBITDA margin. Subscriptions are expected to hit 7.6 million by year-end, with most (85%) customers in rural areas in the U.S., Canada, and Australia.

I’m bullish on Kuiper: This could be one of Amazon’s smartest long-term plays. With 82% of U.S. households already subscribed to Prime, Amazon doesn’t need to out-innovate Starlink; it just needs a decent product and a frictionless bundle. Fold Kuiper into Prime and suddenly millions get an offer they can’t refuse.

If Kuiper delivers 80% of Starlink’s performance at half the price, it’ll win on scale, trust, and reach. Musk may be ahead on engineering, but his volatility is starting to erode consumer goodwill. Amazon, by contrast, has the cash, talent, and a loyal user base ready to click “yes” by default.

Amazon Beats, But Slowing AWS and Tariff Risks Weigh on Outlook

Amazon beat revenue and earnings expectations but offered a mixed picture under the hood:

• AWS growth slowed to 17% YoY, below Wall Street’s estimates.

• North American retail sales rose just 8%, the slowest pace since the pandemic.

• Guidance for Q2 came in cautious.

The stock fell over 3% post-earnings and is down 13% year to date.

Investors appeared more focused on tariff risks than cloud momentum. AWS was mentioned 23 times on the earnings call — down from 38 mentions in Q1 last year.

CEO Andy Jassy said tariff-related uncertainty prompted Amazon to adjust its guidance but emphasized the company’s “pretty maniacal” focus on keeping prices low. 

From an operations standpoint, this was still an impressive quarter: While total revenues grew 9%, growth in higher-margin services revenues and tight cost control boosted net income by 64%.

I’m rotating out of my Amazon position into Alibaba. Over the next year, you're going to see Alibaba’s cloud unit get an unnatural surge from European purchasers who are fed up with always defaulting to American companies for their cloud and infrastructure needs. A year ago if Joe Tsai had shown up to pitch Mercedes or LVMH on using Alibaba Cloud, they’d respond, “China? No way.” Now? They might be seen as no more mendacious than the U.S.

Microsoft Delivers on AI Growth, Taps Capex Brakes

Microsoft delivered a strong quarter, sending shares up 9% after it beat earnings and revenue expectations, driven by continued momentum in its cloud segment. 

Total revenue rose 13% year over year, while Azure revenue surged 33%, outperforming Wall Street’s 29% estimate. Notably, AI was responsible for 16% of Azure’s growth — up from 13% last quarter — showing traction in what’s still a nascent monetization phase. 

But while top-line growth accelerated, capex spending was more conservative, coming in at $21 billion, a 5% decline QoQ and the first decline in more than two years. CEO Satya Nadella told investors on the earnings call that Microsoft was adjusting its investments due to efficiency improvements and shifting geographic demand. 

Microsoft’s 13% rise this month reflects its relative insulation from near-term economic risks compared with other tech giants. Its enterprise focus and long-term contracts provide stability, while limited exposure to retail, ads, and hardware reduces cyclical risk. Microsoft is also less reliant on Chinese manufacturing than Apple or Amazon.

Microsoft has the peanut butter of tech (decent growth) and the chocolate of a defensive company (global, diversified, recession-proof). It’s got the largest recurring corporate revenue base in history with Office, and now it’s got rocket fuel with AI. That’s why people are flocking to it as part of a broader flight to quality.

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Meta Pops 5% on Strong Q1 — AI, Ads, and Apps All Clicking

Meta shares rose over 5% in after-hours trading after the company beat revenue expectations, reaffirmed second quarter guidance, and posted a 35% jump in net income. Revenue grew 16% year over year, driven by stronger ad pricing power, with average price per ad increasing 10%, up from 6% a year ago.

• Daily active users hit 3.43 billion — that’s roughly 62% of the world’s internet population. 

Newer bets are gaining traction. Threads surpassed 350 million monthly users and is now being positioned as the firm’s next flagship app. For context: X has about 600 million monthly users. 

Meta’s Ray-Ban smart glasses are also picking up speed; sales have tripled in the past year, and they now feature real-time AI translation across four languages.

The AI flywheel is spinning: In the last six months, Meta’s AI-driven content recommendations increased time spent on Threads, Facebook, and Instagram by 35%, 7%, and 6%, respectively. Internally, AI is reshaping how Meta operates. CEO Mark Zuckerberg predicts it will handle half of Meta’s engineering tasks within a year.

Meta is also leaning into infrastructure spending. Management raised capex guidance to $72 billion, up from its earlier $65 billion forecast  — a notable contrast to Microsoft’s more cautious stance.

Coming into this report, there were concerns that recession fears, combined with Meta’s decision to pull back on content moderation might cause a slowdown in ad spending. 

These results were a reminder that, recession or not, Meta (and Google) benefit from a key structural advantage: their duopoly in digital advertising. If you want to sell products to consumers, you HAVE to go to Meta or Google.

AI’s real-world shareholder value is boring: its better ad and content targeting. Meta’s AI recommendation system drove a 35% increase in time spent on Threads, 7% more time on Facebook — that’s like getting young people to watch MSNBC. 

I’ve found myself spending more time on Instagram Reels lately. TikTok used to be way ahead in terms of personalization, but now it feels like Reels has closed a lot of that gap.

Combine that with all the political noise around banning TikTok and the fact that Meta already has a massive built-in user base, and it really feels like they’re starting to claw back some market share.

Apple Beats on Earnings, but Growth Worries Linger

Apple reported $95 billion in revenue for the quarter, up 5% and ahead of expectations. But beneath the headline, key segments are losing steam. 

iPhone sales have been flat to down since 2022, services growth slowed to 12%, and wearables revenue fell 5%. China sales, which account for 15% of Apple’s total revenue, dropped 2% as local rivals like Huawei gained ground.

Tariffs will add $900 million in costs this quarter, prompting Apple to accelerate its production shift. India now supplies half of U.S. iPhones, and Vietnam is taking over manufacturing for most other hardware.

Apple announced a $100 billion buyback and a 4% dividend increase — and on that same day, lost its crown as the world’s most valuable company. That tells you a lot.

If you’re trading at 33x earnings, you should be investing in growth, not just buying back stock. That’s a mature company move. To me, it says you’re running out of ideas.

From a peer valuation standpoint, Apple is the most expensive — and it shouldn’t be.

I think Apple is ground zero for what I’m calling the “great multiple contraction” across U.S. markets. It’s the most widely held stock in the world. It marks American tech. And I think as capital flows reverse globally, there’s just no way that won’t come out of Apple.

Department of Education Resumes Collections on Student Loans

For the first time in five years, the Department of Education is restarting forced collections on borrowers who have defaulted on their federal student loans. 

Although federal loan payments resumed in October 2023, forced collections had remained paused — until now. The White House has warned that it “can and will” seize wages, tax refunds, and even pensions to recover unpaid debts.

The federal government typically recovers just 65% to 75% of the balances on defaulted student loans, a rate that is likely to fall further now that the Biden administration ended contracts with private debt collectors.

This ultimately affects more than just student loan borrowers: the Congressional Budget Office expects federal student loans to cost taxpayers $193 billion over the next decade. 

• Averaged out per year, that’s almost double the National Science Foundation’s budget.

Twenty-five percent of Americans under 40 still owe money on student loans. But the more alarming stat is that just 38% of borrowers are current on their payments.

For college grads who took on student debt, a third believe that the costs of college outweigh the benefits. Among those without debt, just 16% feel the same.

The core problem is that the cost of college has increased faster than inflation and median family income.

What’s even more troubling is how little financial literacy stood between students and life-altering debt.

• Nearly 1 in 5 student loan borrowers (19%) don’t know their current student loan balance.

• 1 in 5 student loan borrowers (20%) say they borrowed more than they needed just because it was offered.

When asked simple multiple-choice questions on this financial literacy quiz, just 28% of undergraduates in the U.S. got all three correct.

I think a lot of people, especially in my generation, don’t realize how important your credit score actually is, and the damage it can do to you if you don’t take good care of it. Liberty Street did an analysis: It found that each time you miss a student loan payment (a delinquency), your credit score drops by around 150 points.

So just to paint a picture of what bad credit can do to you:

1) You pay higher interest rates; you’re seen as risky to lenders so you have to pay more on any loans you receive in the future.

2) It can affect your employment. A lot of employers actually check your credit, and if you have bad credit it can cost you a job.

3) It affects your ability to rent. Landlords also check credit. If you have a low score you pay a higher security deposit, and in many cases you’re flat out rejected.

And 4) It simply limits your access to credit. You can get rejected for mortgages, basic loans, and even credit cards.

Kuiper will be worth more than Starlink and will have greater penetration in the United States as it will be stitched into Amazon Prime.

What’s Scott doing in the face of tariffs and market volatility? The answer is in the most recent No Mercy / No Malice.

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