Trade Wars & Cloud Wars
This Week in the Market
Global markets are once again stirred by an uptick in trade tensions: tariffs on India and a handful of other nations have just taken effect. These levies—ranging from tech exports to industrial goods—are driving both headline risk and selective sector rotation. Yet amid the uncertainty, equities hover just below all-time highs, buoyed by resilient earnings and receding recession fears.
How to Trade Post-Earnings
Earnings season is in full swing, and price reactions often overshoot.
Dip-buying irrelevant price weakness tends to be the more reliable strategy. If a company reports solid fundamentals but the stock slumps—often due to short-term jitters or excessive sell-side commentary—that’s frequently a prime buying opportunity.
Shorting irrelevant strength is a trickier play. Stocks sometimes rally out of bulls-eye optimism even when guidance is shaky—traders can get caught chasing momentum at the cost of risk.
In general, fading unjustified dips is the cleaner entry, especially when earnings catalysts are well understood.
Amazon (AMZN) – Post Earnings
Amazon’s latest earnings were objectively strong—double-digit revenue growth, margin expansion, and another solid beat in AWS. Yet the stock still caught some selling pressure post-report. The main culprit? Investor anxiety over cloud market share after Microsoft Azure posted one of its best growth rates in recent quarters.
The knee-jerk narrative was that AWS might be losing momentum. In reality, AWS is still expanding at scale, with growth rates that remain healthy for a business its size. More importantly, the cloud market is not a zero-sum game—global cloud spend is accelerating, and AWS continues to hold a commanding position in enterprise adoption, with sticky, long-term contracts that blunt competitive threats.
The sell-off looks more like overreaction than a fundamental shift. If anything, strong Azure numbers confirm that cloud demand as a whole is booming—meaning AWS will benefit alongside its peers. For long-term holders, that makes the recent dip an opportunity, not a warning sign.
Disclaimer: We own shares of AMZN as of writing this. The content in this newsletter is for informational and educational purposes only and should not be considered financial, investment, or legal advice. A4K Capital and its affiliates are not responsible for any financial losses or decisions made based on the information provided.
