Amazon Didn’t Scare Investors

Welcome to the tech we write home for Halloween 2025. I'm Brian McCullough. Today, Amazon didn't scare investors this Halloween. They're quite pleased, actually. They're not public yet, but we now know how much money OpenAI lost this quarter, NVIDIA's generous investment strategy, and of course, the weekend long-read suggestions. Here's what you missed today in the world of tech.

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Amazon reported revenue up 20% yesterday, beating estimates. What did I say were the two most important details for anyone reporting? Well, quoting CNBC. Revenue at Amazon Web Services for the third quarter totaled $33 billion. Analysts polled by Street Account had expected $32.42 billion or growth of 18.1% from a year earlier. AWS is the world's top provider of...

cloud infrastructure, but it's facing intensifying pressure from competitors Google and Microsoft, which also reported quarterly results this week. Google's cloud revenue increased 34% during the quarter while Microsoft Azure recorded growth of 40%, end quote. So that doesn't sound great. But as I write this morning, Amazon stock is up 13%. What gives? Well, here's Martin Peers in the information.

The cloud over Amazon is lifting. The e-commerce and cloud giant reported Thursday that its cloud unit, Amazon Web Services, accelerated revenue growth by nearly... three percentage points to 20% in the third quarter, its fastest rate of expansion since the end of 2022. That means AWS, by far the biggest of the major cloud firms, has joined its nearest rivals, Microsoft Azure and Google Cloud.

showing accelerating growth. The news said Amazon stock, the worst-performing big tech stock this year, shooting up 13% in after-hours trading. Amazon needed this as proof that its heavy investment in AI is generating incremental business. While each of the big tech companies is ramping up capital expenditures for new AI data centers, Amazon is spending more than anyone else, as befits its share of the...

cloud sector. In the latest quarter, for instance, it spent $34.2 billion on CapEx, and it expects to finish the year with a total CapEx bill of $125 billion. Google, by comparison, expects to spend as much as $93 billion. For the first three quarters, Amazon has spent more on CapEx than it generated in cash from operations, which means the company was burning cash. But its fourth quarter, inflated by holiday sales, is typically a whopper, so the free cash flow picture will likely improve then.

CEO Andy Jassy defended the heavy CapEx investment on Thursday's earnings call, saying that as fast as we're adding capacity, Amazon is making money off it. While he didn't specify how much AI rather than older products drove AWS's revenue acceleration, he talked a lot about customer demand for new AI services and Amazon's internally developed Tranium AI chip. The message?

Amazon is spending a boatload of money on AI, but it's going to be worth it. Amazon shares steadily appreciated through the call, signaling that investors believe him. The performance should put to rest, for the moment, any worries that AWS has been losing ground to Azure and Google Cloud. Some of those worries were arguably exaggerated. As Jesse pointed out, AWS's much bigger size makes growth rate comparisons to smaller rivals hazardous.

While Microsoft doesn't report Azure revenue regularly, CEO Satya Nadella said on Wednesday Azure's annual revenue surpassed $75 billion in the latest quarter, while AWS's latest quarter puts it on an annual revenue run rate. of $132 billion. Google is meaningfully smaller than Microsoft, and Google's numbers include its workplace productivity suite of software.

But the sheer gulf between the growth rates obscured those nuances. Azure grew 39% to 40% in the past two quarters, for instance, a few points faster than Google Cloud. Before this most recent quarter, AWS had been growing at a rate of 17.5%. percent. Investors will surely want to see AWS's growth continuing to accelerate, but for now, they seem to be reassured about Amazon."

So the bottom line for Amazon, the cloud is growing again, which means they're catching that AI surf. And also, this justifies, at least in the street's eyes, that it's worth them spending money on the AI CapEx build-out.

Apple reported earnings as well, and what can I tell you, they were fine. Apple's stock is up about 2% this morning as I write this. And Apple had reached all-time highs over the last month, so I think Street is still relatively happy with them. Now, how interesting is it that of the five big tech companies we've spoken about vis-a-vis earnings this week, the only one for whom AI and CapEx is basically a complete nothing burger is Apple.

That is, again, either a sign of how far behind they are in AI or else how much potential there is for them for whenever they decide to deliver anything even remotely meaningful in regards to AI. Since there's nothing much to say on Apple, let me catch this little tidbit about Microsoft's earnings yesterday that puzzled me, if you'll remember. Remember how Microsoft said they had to report a loss of $3.1 billion on their OpenAI investment?

I couldn't figure out why that was or what that meant, but the register did. Quote, Let's look first at page nine of the official earnings filing with the US Securities and Exchange Commission, which includes the following passage. We have an investment in OpenAI Global LLC and have made total funding commitments of $13 billion, of which $11.6 billion. has been funded as of September 30, 2025. The investment... End quote. End quote.

That second sentence is important. This isn't mark-to-market accounting where it takes the presumed value of the investment based on what the market currently says it's worth, that value is a staggering $135 billion, and marks it up or down from its initial investment. This is equity accounting where OpenAI's gains or losses directly affect Microsoft's net income on its income statement. This is how financial types account for a large but non-controlling stake in another company.

Finally, there's another SEC document containing relevant information from Tuesday's announcement that OpenAI had finalized its transition into a for-profit company, in which it was revealed that Microsoft is now the owner of a 27% stake in the AI upside. start. If Microsoft owns 27% of OpenAI, it stands to reason under Equity Accounting that it bears 27% of OpenAI's losses.

Microsoft's admission that it shaved $3.1 billion off its net income to account for its share of OpenAI losses therefore suggests OpenAI lost about $11.5 billion during the quarter. Microsoft declined to comment beyond confirming that the $3.1 billion loss this year referred to Microsoft's current fiscal year, which started July 1st, not the calendar year. So that's a quarterly loss, not a nine-month loss.

That's a humongous number for OpenAI, given it reportedly generated only $4.3 billion in revenue for the first half of the year. but a sum that won't hurt Big Daddy Redmond too much given that it earned $27.7 billion in net income in the last quarter alone, end quote. In other words, reading between the lines here, we now know that OpenAI lost $11.5 billion last quarter on $4.3 billion in revenue.

OpenAI has begun to sell extra credits for Sora, which currently has a limit of three free generations per day. Ten video gens will retail for $4 through Apple's App Store, quoting The Verge. Bill Peebles, who leads the Sora team at OpenAI, said the video platform's economics are, quote, currently completely unsustainable.

Power users clearly aren't satisfied with the number of free generations they get each day. 100 for users of the higher-end Pro model and 30 for everyone else. So people said OpenAI is going to let... customers get as much usage as they want to pay for. 10 extra video generations will cost $4 according to Sora's listing on Apple App Store, though the number of credits used per video depends on length, resolution, and other factors according to OpenAI's support page.

If you hit your free limit, an option will come up to buy more through the App Store. Credits last for 12 months, and if you want to, you can also use them on OpenAI's coding platform, Codex. are going to start hitting that limit sooner in the future. Eventually, we will need to bring the free gens down to accommodate growth, he said. In the meantime, enjoy the crazy usage limits. He didn't provide details, but said OpenAI will be transparent as it happens.

The decision to charge for video gens comes amid a broader push to monetize and scale Sora and cultivate what OpenAI hopes is an emerging AI-powered creator economy. OpenAI has been steadily adding features to achieve this, such as clip stitching and leaderboards for popular videos and cameos, its legally contentious term for a feature that lets users create deepfake avatars of themselves, others, and original characters, which other creators can use. in their own videos. Sora is going to

Pilot monetization for creators soon, people said, imagining a, quote, world where rights holders have the option to charge extra for cameos of beloved characters and people. The feature has been expected for some time, particularly given the company's efforts to move on from its original hands-on.

approach to copyright and likenesses, which flooded the platform with questionable depictions of fictional characters like Pikachu and SpongeBob and, quote, disrespectful deepfake videos of public figures like Martin Luther King Jr., end quote. The digital world is more connected behind the scenes than you may realize Interconnected is a video podcast series by Equinix that explores the hidden infrastructure behind our connected future

from data centers to cloud ecosystems to the platforms and people who use them. Interconnected's hosts bring tech leaders, industry experts, and innovators together in candid conversations to break down and discuss the future of global connectivity. The third episode of Interconnected, for example, covers the digital infrastructure for a food secure world. They discuss how farmers are moving from 20th century operations to AI and machine learning that analyzes soil, weather and crop data.

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You won't even have time to miss it. With Veeam, it's all good. Keep your business running at Veeam.com. Is there a new coding startup on the rise, or at least new to me?

Bloomberg says NVIDIA plans to invest $500 million to $1 billion in AI coding startup Poolside, which is in discussions to raise $2 billion at a $12 billion valuation. Poolside's new valuation marks a sharp jump from the $3 billion investors said it was worth in a funding round last year. The deal would represent a significant bet by investors on an AI startup that only released its first product a year ago.

Poolside, which has offices in the U.S. and Paris, has a product focused on coding automation, targeting government and defense applications. But it has described its ambitions as building artificial general intelligence with broad purposes. Artificial General Intelligence, or AGI,

refers to a more powerful and hypothetical form of AI that's so advanced it can outperform humans. NVIDIA's participation in the round underscores how the world's largest company by market capitalization is fueling an expanding ecosystem of AI startups, which could also evolve into Yeah, that's why I'm bringing this up. According to PitchBook, NVIDIA has invested in 59 AI startups.

in 2025 so far, including 10 in just the past two months, thereby surpassing the 55 investments it made in 2024 and 12 investments in 2022. This is all part of NVIDIA's deliberate strategy to build a ecosystem around itself. I mean, they have enough money in terms of their stock to do so, right? Though one should note that one person's ecosystem is another person's moat. Quoting Bloomberg again,

I'm delighted that AI startups build on NVIDIA, Chief Executive Officer Jensen Huang said during his keynote speech at the GTC conference on Tuesday. They do so for several reasons. One, of course, our ecosystem is rich. Our tools work great.

The strategy, according to Huang, is to support the broader AI ecosystem. So far, Nvidia has been the largest recipient of the massive surge in spending on AI infrastructure. For that to continue, analysts say it needs AI adoption to take off in the broader economy. buoyed by a slew of new uses pioneered by startups. Many of these startups are now starting to...

Create even more ways to enjoy our GPUs, Wang said, referring to the chip's central to AI capabilities. By becoming a supporter of AI startups, NVIDIA is following a standard pattern for corporate venture arms, but doing it at a faster rate with much higher stakes. Clearly for NVIDIA, as this stuff gets built out, they want it built out on their technology, Bernstein analyst Stacey Rasgen said. Once you get entrenched, it's much more difficult for competitors to come in and take it away.

The investments can be helpful for startups both because of the capital as well as access to NVIDIA's leadership and coveted computing resources. In a meeting with NVIDIA executives, Perplexity Chief Executive Officer Arvind Srinivas asked for technical resources to help a product demo run more smoothly, he told Bloomberg last year. Wong instructed someone to grant the request, and Perplexity had what it needed within...

A half hour, Srinivas said. I've made requests of this nature of other CEOs, and usually it's routed through the next director or VP, and then they take another meeting to understand your use case better, Srinivas said. With Jetson,

Boom, boom, it's done, end quote. In the long reads this week, one interesting gadget and one more traditional long read. First from The Verge, e-bikes are one thing, but what about e-shoes? On Thursday, Nike announced Project Amplify, the world's first... powered footwear system, which it says isn't intended for pros, in fact, quite the opposite. Much like e-bikes provide pedal assistance, Project Amplify uses a lightweight robotics system

to boost running and walking speed. The first-generation product, created alongside robotics partner DeFi, isn't designed for competitive, faster runners trying to shave seconds off their time. Rather, it's intended to serve athletes who want to go faster and farther with less effort by giving them more power for everyday movement. In effect, a second set of calf muscles. Nike explained in a press release.

Project Amplify resembles an ankle brace with a motor, drive belt, and rechargeable battery concealed in a fairly svelte design. It's aimed at athletes, anyone with a body, according to Nike, who are running at a roughly 10- to 12-minute mile pace.

The product has been in development with over 400 athletes over the past several years and remains in testing, but Nike mentioned plans to bring it to consumers in the coming years. The robotic walking aid is among a handful of ambitious... projects nike unveiled today including neuroscience-based footwear and new cooling tech for its athletic apparel end quote And then from the New Yorker, do you see things in your mind's eye? Seriously, stop and think about it. Do you? Quote,

In 2010, Zeman, along with several colleagues, published these findings in the journal Neuropsychologica, terming the syndrome blind imagination. At this point, he decided that lack of mental imagery was a valid syndrome that ought to have a name. After consulting with a classicist friend, he decided on aphantasia.

Fantasia being defined by Aristotle as the ability to conjure an image in the imagination. In 2015, Zeman co-wrote a paper in Cortex describing the condition as it appeared in 21 Subjects. Quote, Congenital aphantasia, end quote. An article about Zeman's second paper appeared in the New York Times, and after that, emails poured in. Around 17,000 people contacted him. Most were congenital...

aphantasics, and most not only lacked visual imagery, they could not mentally call up sounds either, or touch, or the sensation of movement. Many had difficulty recognizing faces. Many said that they had a family member who was aphantasic too. Mo said,

They saw images in dreams, Zemin recruited colleagues to work with him, and together, they tried to reply to every correspondent. Zemin also received messages from people who appeared to have the opposite of aphantasia. They told him that their mental pictures were graphic. and inescapable. There was evidently a spectrum of mental imagery with aphantasia on one end.

and extraordinarily vivid imagery on the other, and most people's experience somewhere in between. Zeman figured that the vivid extreme needed a name as well. He dubbed it hyperphantasia. It seemed that two or three percent of people were aphantasic and somewhat more, were hyper-fantastic. Many of his correspondents, he learned, had discovered their condition very recently after reading about it or hearing it described on the radio.

Their whole lives they had heard people talk about picturing and imagining and counting sheep and visualizing beaches and seeing in the mind's eye and assumed that all those idioms were only metaphors or colorful hyperbole. It was... So listen, dear reader, that's me. That's describing me. All my life, I always assumed people talking about seeing it in your mind's eye or drawing something from memory as being figures of speech.

or in movies when people have images of the battlefield flashback at them in civilian life, or in horror movies when people see dead people and stuff. I thought that was either... movie-making language, or else maybe that does happen to people when they lose their marbles or something. But it turns out that most of you really can actually see things in front of you if you concentrate really hard or you close your eyes.

I guess. Who knew? I didn't until about a couple years ago. Suddenly that whole don't picture a pink elephant thought exercise is not as silly as I always thought it was, because I'm telling you. Not picturing a pink elephant has never been a problem for me because I don't see anything.

For the weekend bonus episode this weekend, not one of those, this is your career style interviews I've been doing of late. This one is more of an actual news breaking episode. Sanjay Poonin, CEO of Cohesity comes on to discuss. their recent strategic acquisition of Veritas' data protection business, also why the recent investment NVIDIA made in them is so important to them, and whether or not we can expect a Cohesity IPO next year.

They were last valued at $7 billion, but if their competitive public company comps are in a guide, they'll likely hit public markets at much, much more than that in my back-of-the-envelope estimation, because Rubrik currently has a $15 billion market cap. So enjoy that. Talk to you on Monday. What the hell is going on right now? And why is it happening like this? At Wired, we're obsessed with getting to the bottom of those questions on a daily basis.

And maybe you are too. I'm Katie Drummond, the Global Editorial Director of Wired, and I'm hosting our new podcast series, The Big Interview. Each week, I'll sit down with some of the most interesting, provocative, and influential people who are shaping our right now. Big interview conversations are fun. I want a shark that... That eats the internet. That turns it all off. Unfiltered.

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