Squawk on the Street 2nd Hour 10/31/25

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Carl Quintanilla (1:06)

Good Friday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Courtney Reagan, David Faber here at Post 9 of the New York Stock Exchange. Sara Eisen's on assignment. Today, what's next for big tech, after some clarity at least around the Mag 7, this massive pop for Amazon, consumer discretionary today at 4.5%.

We'll talk to T. Rowe Price Portfolio Manager Tony Wong about his top picks going into year-end. Speaking of tech, is the massive outlay of cash into AI sustainable? We'll talk to a Goldman Sachs economist who says the spending boom is not too big. Plus, Disney goes dark. Details on this carriage dispute with YouTube TV that has left customers without ESPN and ABC going into a big weekend of sports.

David Faber (1:46)

Let's start though with the results from those two tech mega caps. Mackenzie Segalis is covering Amazon stock spike this morning. Steve Kovach has got the Apple story for us as well. Mackenzie, we'll start with you on Amazon.

Mackenzie Segalis (1:59)

Hey David, so Amazon shares are popping 12% all thanks to its cloud comeback story. AWS grew just over 20%, its fastest pace since early 2022, and beat even the most bullish whisper numbers with 33 billion in revenue. That helped ease concerns that Amazon was slipping in the cloud wars, especially after Google and Microsoft posted even stronger year over year percentage growth. Now CEO Andy Jassy, he says that demand is strong across both AI and traditional workloads, and that Amazon is scaling compute to meet it. Now he told investors he expects AWS to sustain this momentum for a while, ting the company up for its first ever $200 billion plus quarter in Q4. Backlog, that's now at $200 billion, not including October's unannounced deals, which apparently exceeded the entire Q3 volume. So this wasn't just a rebound, it was a referendum. Amazon needed to prove that its massive infrastructure bets are paying off. It spent $34 billion in Q3 alone, and now expects to hit $125 billion in CapEx for the year, more than its projected operating income. A big chunk of that is going into its in-house AI chips and new hyper-scale campuses like Project Rainier and $11 billion data center that had just built to power models exclusively for Anthropic. This is Amazon's answer to OpenAI's Stargate. And the chief takeaway across Big Tech, the winners aren't just the ones spending the most, they're the ones showing that it is working. Alphabet and Amazon are seeing that halo effect. Microsoft, it's still growing fast, but saw its stock dip and then Meta. Despite a revenue and earnings beat, it logged its worst drop in three years. As investors question whether its AI push will ever turn into profit. Guys?

Courtney Reagan (3:42)

Mac, how would you classify the tone of executives on the call? Obviously, several days ago, Amazon announced these layoffs, but then this report was so blockbuster. Did they address that at all and how it fits in with the bigger picture, the sentiment, the tone of the call in the company itself right now?

Mackenzie Segalis (4:00)

I mean, what's fascinating and kind of this connective tissue that links the alphabet and Amazon bullish reaction we've seen is that they both have an in-house silicon program. That basically, their in-house AI chips compete with Nvidia, and that's a really helpful upside when you think about the 70% plus gross margin that Nvidia has on sales. And so they're able to undercut on price, and that's something that Jassy keeps returning to Amazon CEO, Andy Jassy, talking about the fact that their chips are 30 to 40 percent cheaper than the models out there from the likes of Nvidia, and that's part of the value proposition they offer AI customers specifically. And David, one thing that I've been keeping in mind, those unnamed October deals that they signed, you broke on our air earlier this week, that Microsoft no longer has right of first refusal with open AI compute deals, and that's one of their big customers they don't have on the list so far. So I wonder if we can break that one together.