The Compound and Friends | Big Tech Earnings Week With Alex Kantrowitz

Date: October 28, 2025
Hosts: Josh Brown (A), Michael Batnick (B)
Special Guest: Alex Kantrowitz (C) – Host of the Big Technology Podcast

Episode Overview

This episode is a deep dive into Big Tech earnings week, focusing on the “Magnificent Seven” (Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla) with expert commentary from tech journalist Alex Kantrowitz. The hosts and guest dissect market expectations, AI’s disruptive potential, strategic partnerships, and the ongoing “efficiency” trend in corporate America that’s increasingly powered by AI—including its impact on both blue-collar and white-collar workforces.

Key Discussion Points and Insights

1. Tech Earnings Week: Setting the Stage

• High Market Expectations:
  • Tech sector, especially the “Mag 7,” has soared pre-earnings. Apple is at all-time highs, Nvidia hit $4 trillion, and Microsoft is surging.
  • Michael Batnick: “It’s the strongest three-day stretch of the year… expectations are super high going into the print and again short-term, but they better deliver.” [05:25]
  • Josh Brown: Cautions listeners not to over-interpret post-earnings, first-day stock reactions, given the massive run-up.
    • “A lot of these stocks just went vertical going into these reports and it would be totally normal for a company to have a great report and the stock not go up.” [06:11]

2. Alphabet (Google): Search, Cloud, & AI Competition

• Search Threats from ChatGPT & Atlas Browser:
  • Alex Kantrowitz: “We’re three years after ChatGPT came out and search is not going away... Google still is the leader for Internet search.” [08:31]
• Cloud & Data Centers:
  • Big spending on cloud, deal with Anthropic, and rising capital expenditures ($75B → $85B).
  • Alex: “The money is just flowing in like a basically unprecedented way in cloud... I would not go bananas if you see some numbers you don’t like because there could be a broader story.” [11:07]
• Anthropic Partnership:
  • First-ever direct chip deal with a third party (a million TPUs earmarked for Anthropic).
  • Alex: “This is the beginning of a new really important strategic alliance between Google and Anthropic... Google needs a counterweight to the Microsoft/OpenAI/Nvidia/Oracle cluster.” [12:45]
• Potential Competitive Risks:
  • OpenAI’s Atlas browser is notable but not an existential threat—Chrome’s dominance is rooted and Google can easily integrate comparable features.

3. Meta: AI Spend, Data Center Financing, & Existential Threats

• Massive AI Investment:
  • Creative off-balance sheet financing ($27B debt structured as leases) with Pimco, BlackRock, Blue Owl, to fund rapid data center buildout.
  • Josh: “Facebook does something really clever… makes their balance sheet look cleaner.” [15:57]
• AI ‘Friends’ and the Loneliness Epidemic:
  • Alex: “If you’re Meta… you basically do whatever you can to get ahead of [the emergence of AI friends]. We have a loneliness epidemic… people are turning to AI and so it’s a pretty big threat to you.” [17:47]
  • Michael (with dark humor): “It’s an existential threat that they might not be able to monetize the collapse of society that they helped to create.” [18:16]
• Internal Chaos and AI Strategy:
  • Meta’s repeated restructuring of its AI teams, morphing strategies, and the underperformance of Llama models.
  • Alex: “Llama is a failure… it is not setting the standard for open source. It’s been lapped by China in some ways.” [20:48]
• Market Reflection:
  • Ongoing strategic uncertainty may explain Meta’s lagging stock price (relative to sector peers).

4. Amazon: Lagging in AI, Rise of Automation

• AWS No Longer the Cutting Edge:
  • Josh: Quoting industry whispers: “Nobody really wants to write to AWS anymore. They don’t see it as the cutting edge sandbox that it once was.” [25:28]
  • Alex: “They don’t have the juice right now... you’d want basically the state of the art. They made their own models, but no one talks about them at all.” [26:45]
• Potential Strategic Response:
  • Could focus on sales and incentives to attract AI startups until models commoditize.
  • Alex: “Still a sales business... figure out a way to get programs where they can get AI startups to be working with AWS more than they are.” [27:17]
• White Collar Job Cuts & Automation:
  • Amazon’s plan to cut 14,000 corporate jobs, explicitly citing “organizing more leanly” for adaptability and speed using AI.
  • Michael: “Rest of the street… is going to take this AI as cloud cover to get lean and do whatever they have to do. And the street is rewarding it.” [43:17]
  • Josh: “This is no longer about people in the warehouse. This is now biting into bone.” [46:23]
  • Reference: NYT report—Amazon aims to avoid hiring 160,000+ workers by 2027 via automation [43:35–45:23]

5. Microsoft: Deepening OpenAI Relationship

• Profit Sharing and Strategic Win:
  • Microsoft secures 20% of OpenAI profits and long-term IP access—de-risking its position.
  • Alex: “Microsoft gets such a large chunk of OpenAI, 27% of the Public Benefit Corporation, entitlement to the profits, access to the IP, and most importantly… sort of gets off the Sam Altman roller coaster.” [31:14]
  • Removal of AGI-triggers that could have jeopardized Microsoft’s stake.

6. Apple: All Eyes on iPhone Sales and AI Partnerships

• Earnings Preview:
  • Record highs ($4 trillion market cap), $102B revenue expected.
• iPhone 17 Matters Most:
  • Alex: “To me, the company is the iPhone company. It’s always going to be the iPhone company. If it’s able to revitalize growth in that business, that’s all you need.” [34:00]
• AI Partnership Speculation:
  • Apple likely to strike a deal with Google to use Gemini for next-gen Siri—Anthropic was a dark horse, but Google seen as most probable. [35:37]

7. The Era of Corporate Efficiency: AI-Powered Job Losses

• Lean Staffing Becomes the New Normal:
  • Companies like Amazon, UPS, and Target are announcing tens of thousands of layoffs, especially white-collar roles.
  • “Year of Efficiency” is becoming the “Decade of Efficiency”—Wall Street rewards cost cuts with higher stock prices.
  • Josh: “Great for investors… terrible for society.” [49:40]
• AI enabling companies to run with fewer people:
  • Example: Intuit rethinking backfilling roles [47:10]
  • UPS credits AI for operational streamlining and higher profits despite job cuts. [48:11]

8. Market Trends and Technicals:

• Cap-Weighted vs. Equal-Weighted Indices:
  • The Mag 7 continue to dominate the market returns via cap weighting.
  • Chart analysis shows staggering outperformance of tech-heavy indices over equal-weighted S&P.
  • “Cap weighting destroyed equal weight over the past couple of sessions.” [66:24]
• Historical Parallels:
  • Comparing the rapid rebounds and record highs to the late-1990s tech boom and other market cycles. [40:06–41:58]

9. Small Cap Spotlights:

• IMAX (Entertainment Tech):
  • IMAX theaters central to Hollywood’s big releases; unprecedented advance ticket demand; expanding format.
  • Josh: “IMAX is the most important entertainment company in Hollywood other than Netflix and Disney.” [57:58]
• Etsy (Online Marketplace):
  • Market cap ($7B), new AI seller tools, and a major Lone Pine investment signal a turning point post-80% drawdown.
  • Josh: “Most people who are on the Internet are aware of Etsy. Very fewer investors are aware of Etsy. The stock. I love that disconnect.” [63:16]

Notable Quotes & Memorable Moments

• Alex Kantrowitz on Data Center Investment:

  • “It’s going to be really easy to hold onto some signals that you don’t have the full picture on. I would not go bananas if you see some numbers you don’t like because there could be a broader story.” [11:07]

• Josh on Meta’s Threat from AI ‘Friends’:

  • “Meta doesn’t have to worry about a new social network. It has to worry about a replacement for the failed experiment that is social networking.” [18:02]

• Michael on Corporate AI Layoffs:

  • “Rest of the street... is going to take this AI as cloud cover to get lean and do whatever they have to do. And the street is rewarding it. So it’s scary.” [43:17]

• Alex on White Collar Automation:

  • “This is no longer about people in the warehouse. This is now biting into bone.” [46:23]

• Alex on Microsoft’s Deal with OpenAI:

  • “Microsoft gets such a large chunk of OpenAI... and most importantly... gets off the Sam Altman roller coaster.” [31:14]

Important Timestamps

• [05:25] – Setting up earnings expectations for tech
• [08:31] – Alex on the durability of Google search
• [11:07] – AI-driven capital expenditure at Google and cloud investments
• [12:45] – The Anthropic-Google TPU deal
• [15:57] – Meta’s creative data center financing
• [17:47] – Existential threat to Meta from AI “friends”
• [20:48] – Meta’s AI/LLAMA model struggles
• [25:28] – AWS losing its “cutting edge” position
• [31:14] – Microsoft locks in OpenAI partnership
• [34:00] – Apple’s iPhone remains central
• [35:37] – Speculation about Apple’s AI model partner (Gemini/Google)
• [43:17] – Amazon’s white-collar layoffs and automation as a business model
• [48:11] – UPS, Target, and the new corporate model: less hiring, more AI

Tone and Language

Hosts maintain an irreverent, sharp, and highly conversational style, blending serious analysis with banter and industry inside jokes. Alex Kantrowitz brings sharp, concise industry insight, often grounding speculation with nuanced takes on tech product trends and C-suite strategy.

Conclusion

This episode provides a comprehensive, skeptical, and practical look at Big Tech’s earnings week and the structural changes AI is driving in both the economy and workforce. With informative, forward-looking commentary from Alex Kantrowitz and candid stock ideas from Josh and Michael, it’s a must-listen for market watchers interested in the intersection of tech, markets, and the rise of AI.

For further details, listen to Alex Kantrowitz’s Big Technology Podcast for more in-depth takes on AI and tech industry news.