Amazon shares were down about 7% following a 1% September revenue miss and a December guide that was in line with expectations. AWS grew at 39% y/y in September vs. the Street at 38% and a 40% whisper. The big news was management did the unthinkable and guided AWS to grow at least 40% y/y in both 2027 and 2028. To put the magnitude into perspective, they typically only give one quarter of AWS guidance. Separately, they guided for AWS revenue to reach $1T annually in 5–10 years, which suggests the growth will be as high as 42% in each of the next five years or as low as 22% in each of the next ten years. Either way, the magnitude and duration of that growth are off the charts. Today, AWS is about 21% of revenue. In five years it will be around 50%. The fact that management led the earnings call with these two guidance points, along with comments that they will be selling their custom GPUs (Trainium) starting late in 2027, underscores they want investors to think of them as an AI infrastructure company and to focus less on the retail and ad business, which today accounts for about 75% of revenue. In the end, the shift in the investment thesis comes at a good time when the core retail business is poised to come under attack from personalized bots and the core AI infrastructure is set to take off.

My initial read on the first hour of the Duo launch is that lines are surprisingly long given the high price point. My confidence in my estimate calling for 20m units in FY27 (7% of total iPhone units) inched up…

On Sep 18th, I wrote about the lead times for the iPhone 18 Pro lineup and concluded that Apple's decision to split the cycle is working. At the time, the Pro lead times were running 15% longer than last year and the Pro Max 18% longer. Since Duo will cannibalize some Pro demand, the higher lead times suggest that some would be iPhone 18 buyers are opting for Pro models, offsetting much of the cannibalization. Since then, lead times have dropped and are now 31% shorter for the Pro and 1% longer for the Pro Max. While the drop is concerning, the fact that the Pro Max remains in line with last year should be viewed as a bigger positive than the falloff in Pro lead times, given it's still surprising that the lead times for both models aren't 20% lower than last year in the face of the Duo launch (pre-orders started on Sep 16).

It's going to get ugly for traditional car makers. Tesla deliveries were down 2% y/y in September, compared to Ford and GM, which reported EV deliveries down about 75%. After two years of declines in deliveries, down 1% in CY24 and down 9% in CY25, Tesla's car business has returned to growth for two consecutive quarters (I estimate they would have been up around 8% this Sept. if you adjust for the U.S. tax credit ending last Sept.). While the high gas prices are lifting all EV makers' sales (Ford and GM would have been even worse if not for the high prices at the pump), Tesla is winning because they have the best value and buyers are increasingly prioritizing FSD in their decisions. Those two tailwinds are sustainable and will likely lead to deliveries next year increasing by around 15% vs the Street's current estimate of up 9%. P.S. More deliveries mean more shots on goal for selling FSD and training FSD to be better.

With shares of META moving higher on the potential behind Muse, it's worth noting the big picture; personalized AI subscriptions are an underappreciated AI growth lever. On the consumer side, I estimate only 2% of all daily internet users pay for an advanced model. While this opportunity directly benefits the frontier model companies, it is also a big opportunity for Meta and Apple, which are building personalized AI. For example, by 2030, I see a conservative case in which Apple increases its operating income in that year by 18% and an aggressive case in which it doubles it. For Meta, I see a conservative case of an additional 8% of operating income and an aggressive case in which it adds 80%. While the gap between conservative and aggressive is wide, it's built on a belief that these bots will be valuable to consumers and they'll be willing to pay for the technology. On the enterprise side, the average monthly AI spend per employee in the U.S. is only $13 versus the average software spend of $780, suggesting there's lots of room to grow.

This fall, Apple split the iPhone upgrade cycle into two launches: Pro models and Duo this fall, followed by the iPhone 18, 18e, and Air in the spring. Our tracking shows Pro model pre-order lead times are about 15% longer than a year ago on launch day. Since Duo will cannibalize some Pro demand, the higher lead times suggest that some would-be iPhone 18 buyers are opting for Pro models, offsetting much of the cannibalization. Putting it all together, I think the Street is still 10% too low on iPhone revenue for FY27. We’ll get a clearer read when Duo pre-orders open on October 16.

Shares of AAPL moved about 7% from the end of the “Surprise and Shine” event to close of market today (2.5 trading days), while the Nasdaq was flat. The move higher underscores that investors are optimistic that the new Duo will add a measurable amount to revenue in the coming year. That said, a look at FactSet analysts estimates reveal consensus revenue expectations for the next three quarters actually went down by 1% for analysts that have updated their models. The dynamic of shares of AAPL going higher while numbers are going slightly lower underscores the mixed investors feelings on the Duo topic. In the end, I expect Duo will be more successful than current expectations and account for around 12% of overall iPhone revenue in FY27, and add 3% to the company’s overall growth rates. The biggest disappoint of the event was we didn't get an update on the timing of the new Siri.