Markets
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Luke Kawa
8/27/25

Morgan Stanley counts Amazon’s data center square footage to explain why its cloud business will boom

The second-quarter reporting period showed that competitors have been making up ground on Amazon in a key AI battleground among tech giants: their cloud businesses.

Amazon Web Services’ revenues rose 17.5% year on year in Q2, trailing growth of 31% for Alphabet’s Google Cloud and 39% from Microsoft’s Azure. Granted, AWS is still the leader in the cloud, but its slow growth versus rivals was a sore spot for investors after earnings — especially after CEO Andy Jassy fumbled his way through an answer on the subject.

Amazon Web Services had a $195 billion backlog as of June 30, and turning those would-be orders into actual cash requires time and/or increased capacity. Morgan Stanley analysts led by Brian Nowak have a framework for assessing how Amazon aims to maintain its dominant footprint in the cloud business: by literally counting up expected data center square footage.

“Our analysis of AWS expected forward square footage (analyzing S&P 451 Research DataCenter KnowledgeBase and company filings) speaks to how AWS potentially has ~8.5 million/~10 million of data center square feet coming online in ’25/’26. This would be similar to annual square footage added in ’24 and ahead (in some cases significantly ahead) of prior periods,” they wrote. “This expected square footage growth combined with AWS’s ~$3.5 billion historical median incremental revenue per prior year incremental square foot leads to our sensitivity below showing how upcoming data center capacity growth could translate into 20%+ AWS revenue growth in ’26.”

Morgan Stanley AWS revenue growth estimates

However, this analysis also comes with a large caveat attached:

“We acknowledge there are sources of volatility and (ongoing) constraints around incremental revenue per incremental square feet analyses — component supply constraints like chips, racks, cables, boards, power, and demand differences like client readiness and products to drive adoption, product pricing, and yield per foot, etc. — but we think this framework is helpful in showcasing how AWS is investing to match demand and drive accelerating growth in the early innings of the GenAI era.”

Nowak has an “overweight” rating and $300 price target on Amazon.

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Matt Phillips
19m

SpaceX spectrum deal sends would-be rivals lower

Shares of struggling satellite services company EchoStar soared Monday, after the company — which had recently tottered close to bankruptcy — announced the sale of some of its wireless spectrum licenses to Tesla CEO Elon Musk’s SpaceX for $17 million.

The sale provides a competitive advantage to Musk’s growing Starlink satellite services business, as the licenses it is acquiring from Echostar allows Starlink to operate ground based broadband and cellphone services, the Wall Street Journal reported.

Entities that stood to be hurt by the emergence of a Musk-led SpaceX Starlink service got hit hard on the news. AST SpaceMobile, which has plans to offer a similar satellite-to-consumer cellular service, tumbled.

So did wireless tower providers like Crown Castle and American Tower. Low cost cellular service provider T-Mobile, which had a deal with SpaceX, also slumped, as Luke noted earlier, along with other large wireless telecommunication services providers.

The wireless telecommunications industry grouping within the S&P 500 was down more than 2.5% shortly after noon, making it the worst performing industry within the S&P 500 on Monday.

SpaceX strikes $17B deal to buy EchoStar's spectrum for Starlink's direct-to-phone service | TechCrunch

SpaceX strikes $17B deal to buy EchoStar's spectrum for Starlink's direct-to-phone service | TechCrunch

Entities that stood to be hurt by the emergence of a Musk-led SpaceX Starlink service got hit hard on the news. AST SpaceMobile, which has plans to offer a similar satellite-to-consumer cellular service, tumbled.

So did wireless tower providers like Crown Castle and American Tower. Low cost cellular service provider T-Mobile, which had a deal with SpaceX, also slumped, as Luke noted earlier, along with other large wireless telecommunication services providers.

The wireless telecommunications industry grouping within the S&P 500 was down more than 2.5% shortly after noon, making it the worst performing industry within the S&P 500 on Monday.

Robinhood, Amcor, Applovin surge on after being added to S&P 500

Robinhood, AppLovin vault higher as the "inclusion effect" is in full force

Membership has its privileges.

Matt Phillips3h
markets
J. Edward Moreno
3h

Hims rises, Novo dips after FDA releases “green list” of GLP-1 raw material suppliers

Hims & Hers rose and Novo Nordisk slipped in early trading after the US Food and Drug Administration released a "green list" of foreign GLP-1 ingredient suppliers that it considers in compliance with agency standards.

Some telehealth companies like Hims sell copycat versions of Novo's and Eli Lilly’s blockbuster weight-loss drugs through compounding pharmacies, which take the active ingredients from FDA-approved medications and make adjusted, or "personalized,” versions of the drug for patients.

Novo and Lilly have fought against this, arguing that it infringes on their intellectual property. They've sued smaller telehealth providers, pharmacies, and clinics in lieu of any action against them from the FDA. Instead, the FDA gave compounders a list of suppliers it deems safe.

Recent developments in the cases filed by the drugmakers so far as well as the FDA's recent actions suggest telehealth companies may be in a less risky position than investors previously thought. As of Monday morning, prediction markets pegged the likelihood of a suit from Novo against Hims at 34%, down from about 70% earlier this month.

Luke Kawa
3h
Gold is outperforming the Nasdaq 100 since the launch of ChatGPT

There’s a bull market in anti-humanity.

Close-up of gold bars
markets
J. Edward Moreno
4h

UNH rises after saying it plans to reiterate outlook

UnitedHealth rose 2% in early trading after it disclosed that it plans to reiterate its full-year earnings outlook when it meets with investors this week.

The company said on July 29 that it was expects to report annual adjusted earnings per share of at least $16. The company had previously pulled full-year guidance and prior to that withdrawal, had told investors it expected to see earnings of $26 to $26.50 per share.

Currently, a analysts polled by FactSet are penciling in $16.23, compared to $17.21 before the guidance came down.

UnitedHealth has had a tumultuous year as he industry has been hit with rising costs of care, and UnitedHealth specifically has been hit with investigations into its Medicare Advantage practices. It recently got a boost after Warren Buffett's Berkshire Hathaway revealed that it's built a stake in the company

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