Stocks Crashed Hard 🩸
What a way to end October.
Friday was a bloodbath. Tech got sold hard, semis got sold harder, and the AI names took the worst of it. My own watchlist lit up red. Nebius down 10% on the day. Bloom down over 8%. Nvidia, CrowdStrike, everything in the growth book got hit at once.
And look, I get why people are scared, but I keep coming back to the numbers we just saw this week, because the numbers and the stock prices are telling two different stories.
Microsoft printed a clean beat. Azure grew 48%. Google Cloud grew 103%. AWS grew 39%, its fastest in almost five years, and Jassy is guiding to 40% plus growth in 2027 and 2028. Demand is not the problem. Demand was never the problem.
What changed is what the market is grading. It stopped asking whether AI demand is real. Now it is grading the bill. The free cash flow. The capex. The dilution. Google printed negative free cash flow in the quarter. Amazon is at a $42 billion outflow over the last twelve months. Meta is raising equity. That is what got sold, not the businesses.
So here is the question I keep asking myself. What is the bigger risk? These companies spending hard now and taking some margin pain while they build, or these companies protecting short term profits and waking up obsolete in three years? The companies that skipped the internet got left behind. The ones that skipped cloud got left behind. I know which mistake I would rather own.
And the balance sheets are not broken. These are still some of the most profitable, cash rich businesses on the planet, growing revenue at rates most companies would dream of. They are just spending like it too.
I am not saying the selloff is over. It might not be. And I am not going all in on a Friday close either, but when names I already own and believe in get marked down double digits in a week because the market changed what it is grading, I pay attention. That is usually where the opportunity sits.
The buildout is real. The bill is real too. This week the market started pricing them separately. My job is to figure out which one matters more over five years. I already know my answer.
Happy weekend and as always, happy investing ☕️🫶🏽
