To The Moon

💰 As July closes, U.S. stocks have seen a high-level correction, yet the momentum in CapEx remains strong.

💹 $Vertiv Holdings LLC(VRT)$/$American Superconductor(AMSC)$/$Allient Inc.(ALNT)$: Poised to fully benefit from this wave of CapEx prosperity.

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Doubling down on CapEx

| Trick or Treat: Insights into the Mag 7 CapEx Competition

With Q2 earnings reports now available, CapEx has emerged as a battlefield for big tech companies. The ability to convert substantial profits into effective market investments, thereby driving the development of the entire tech ecosystem, is critical for these giants to reinforce their positions and secure long-term returns—this has become a standard (if not the only one) on Wall Street.

On one hand, investors are meticulous about CapEx figures, making careful comparisons; on the other hand, exceeding expectations leads to generous rewards, as seen with $Microsoft(MSFT)$,, $Alphabet(GOOG)$, $Meta Platforms, Inc.(META)$, and $Apple(AAPL)$, all of which reported better-than-expected figures and experienced stock price increases. Conversely, companies like $Amazon.com(AMZN)$ and $Tesla Motors(TSLA)$ saw their stock prices decline.

Why is this the case? The capital investments of major tech companies in AI reflect their standing in the AI landscape, even if only temporarily. A failure in the AI race could result in the worst outcome: being pushed off the playing field. Below is an overview of the CapEx of major tech companies for this year, listed in descending order of annual CapEx amounts:

- Amazon: Committed to investing up to $100 billion this year in AI. In Q1, Amazon's capital expenditures reached $24.3 billion, and in Q2, they rose to $31.4 billion.

- Microsoft: Q2 CapEx was $24.2 billion, with expectations to exceed $30 billion in the next quarter—marking the first clear forecast from Microsoft, demonstrating confidence to the market.

- Alphabet: Increased its 2025 CapEx target to $85 billion, surpassing the previous guidance of $75 billion, with further increases anticipated in 2026 due to strong cloud computing demand.

- Meta: Raised its full-year CapEx forecast to $66-72 billion, higher than the previous expected range of $64-72 billion. The company is also aggressively recruiting top AI talent to build a super team.

- Tesla: Projected 2025 CapEx of approximately $8 billion, with expectations for a downward adjustment. In comparison, Tesla's AI investments for 2024 are expected to be around $10 billion, nearly half of which will be internal.

- Apple: Estimated 2025 CapEx of approximately $4 billion, with significant increases expected this year.

Behind computing power lies electricity; the importance of high-efficiency, high-density, and highly reliable power sources continues to rise, posing ongoing challenges regarding the "quality and quantity" of electricity needed for AIDC. Companies with first-mover advantages in the overseas AIDC power ecosystem are well-positioned to fully enjoy this CapEx boom.

- $Vertiv Holdings LLC(VRT)$: Holds technological and ecological advantages in the pricing and profit structure of the AIDC power market.

- $American Superconductor(AMSC)$: Saw a 29% increase on Thursday; its July 30 earnings report revealed an 80% revenue growth, with net profit and EPS surpassing expectations.

- $Allient Inc.(ALNT)$: Benefiting from developments in the semiconductor and robotics industries, the company has already risen 66% this year.

| Market Recap

On the last trading day of July, all three major indices closed lower, with $NASDAQ(.IXIC)$ down 0.03% but recording a 3.70% increase for the month; $S&P 500(.SPX)$ fell 0.37%, with a month-to-date gain of 2.17%. Growth, growth, and (even higher) growth: the true market driver is quarterly performance. Amid high growth and strong guidance, META rose 11.29%, MSFT gained 4.04%, and AMZN increased by 1.78%.

The outlook remains optimistic. Earlier, investor enthusiasm ignited market activity, so a slight pullback this week is not unexpected against a backdrop of high risk appetite. Looking ahead, oversold large caps and strong IPOs are likely to activate market trading activity and create the next wave of upward momentum.

Megacaps - AMZN vs AAPL (con.)

AMZN: Pre-market today, shares were down 8%. Despite exceeding performance expectations in the previous quarter, the guidance is somewhat pessimistic, as AWS's growth rate did not meet expectations, raising investor concerns about Amazon's market position being eroded by competitors like Microsoft and Google.

- Amazon expects the midpoint of its operating profit for Q3 to be $18 billion, below the consensus estimate of $19.5 billion.

- AWS's revenue growth rate is 18%, slower than its competitors. Microsoft Azure's revenue growth rate is 39%, while Google's Cloud is at 32%.

AAPL: Pre-market today, shares were up 1.6%. This quarter's total revenue reached $94.04 billion, a 10% year-over-year increase, marking the highest growth rate since December 2021 and significantly exceeding market expectations.

- iPhone sales exceeded expectations, benefiting from government subsidies in China. iPhone revenue increased by 13% year-over-year, contributing nearly half of total revenue; App Store and other service revenues set new records, well beyond expectations.

- A significant increase in AI investment is planned. The CFO stated: "We are increasing our investments significantly in AI. You are going to continue to see our CapEx grow. It’s not going to be exponential growth, but it is going to grow substantially. And a lot of that’s a function of the investments we’re making in AI."

IPO of the Year (so far)

On July 31, creative design SaaS company $Figma(FIG)$ went listed on the New York Stock Exchange, with an initial share price of $33, rising 250% on its first day, reaching a market cap of over $56.3 billion, making it the largest IPO in the U.S. so far in 2025. As of the end of March this year, Figma had 450,000 paid customers, with 95% of Fortune 500 companies relying on its platform for product design. The market generally views Figma as a disruptor to Adobe, while $Adobe(ADBE)$ has fallen nearly 20% since the beginning of the year.

Top Movers

$APPLIED DIGITAL CORP(APLD)$ gained 31%. On July 30, the company reported Q4 FY2025 revenue of $38 million, a 41% year-over-year increase, exceeding market expectations. The company also announced a 250 MW AI data center lease agreement with CoreWeave on July 30, expected to generate about $7 billion in contractual revenues. The company specializes in high-performance computing data centers, providing infrastructure for the AI and HPC sectors, with expanded orders reinforcing its industry positioning.

$Impinj(PI)$ rose 26%. Impinj's quarterly performance and guidance exceeded expectations, driven by demand growth for its M800 and Gen 2X products.

| Doubling down on CapEx

In the competitive landscape of big tech, effective CapEx strategies are vital for sustained growth. Companies like AMSC, VRT, and ALNT have showcased remarkable performance, with AMSC's revenue soaring, VRT leading in AI infrastructure, and ALNT exceeding expectations in multiple sectors.

VRT

As a leader in data center infrastructure, $Vertiv Holdings LLC(VRT)$ plays a crucial role in the AI wave. The cooling and power costs of data centers represent the largest operational expense, and VRT's liquid cooling technology achieves efficient heat dissipation through direct contact with chips, improving cooling efficiency by 3,000 times compared to traditional air cooling. VRT’s core advantage lies in its deep integration with industry giants. NVIDIA has chosen VRT to provide liquid cooling solutions for its next-generation Blackwell GPU series.

AMSC

$American Superconductor(AMSC)$ increased by 29%. The July 30 earnings report showed an 80% increase in revenue, with net profit and EPS exceeding expectations. As a provider of megawatt-level power resilience solutions, the company focuses on wind and grid systems, with revenue growth stemming from organic growth and the acquisition of NWL.

ALNT

$Allient Inc.(ALNT)$ is a global company that designs, manufactures, and sells precision and specialty motion control components and systems for various industries worldwide. The company serves critical sectors such as healthcare, life sciences, aerospace and defense, industrial automation, robotics, semiconductors, transportation, agriculture, and building and facility infrastructure. In the last quarter, revenue exceeded analyst estimates by 5.7%, and EPS surpassed estimates by 31%. Looking ahead, revenue is forecasted to grow at an average of 3.7% per year over the next three years, compared to an 8.1% growth forecast for the electrical industry in the U.S.

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