Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

<ul>
<li>2Q26 revenue up 20% YoY. Operating profits up 43% YoY. The revenue backlog is exploding, up 150% YoY. This quarter demonstrates the impact of AI Capex on AWS growth/margins.</li>
<li>AWS Annualized Run rate is at $169bn. CEO suggests that AWS could become a $ 1 trillion business.</li>
<li>Consensus could be a bit low on revenue growth, high-teens looks more likely than low-teens. Margins expansion is ok. Stock trading at 23.4x 2027 EPS, 18x 2028.</li>
</ul>


2Q26 revenue up 20% YoY. Operating profits up 43% YoY. The revenue backlog is exploding, up 150% YoY. This quarter demonstrates the impact of AI Capex on AWS growth/margins.
AWS Annualized Run rate is at $169bn. CEO suggests that AWS could become a $ 1 trillion business.
Consensus could be a bit low on revenue growth, high-teens looks more likely than low-teens. Margins expansion is ok. Stock trading at 23.4x 2027 EPS, 18x 2028.


Amazon 2Q26: After Google and Microsoft, Another Cloud Acceleration: Growth Higher, Margins Higher

Samsung Electronics Co., Ltd. manufactures a wide range of consumer and industrial electronic equipment and products such as semiconductors, personal computers, peripherals, monitors, televisions, and home appliances including air conditioners and microwave ovens. The Company also produces Internet access network systems and telecommunications equipment including mobile phones.

<ul>
<li>Management says that Memory supply shortage will be worse in 2027 than in 2026 and will persist through 2028. 3Q26 HBM4 revenue will more than triple QoQ.</li>
<li>Memory Long Term Agreements signed with 5 largest data centre customers. Target coverage: 60% to 70% of planned capacity. Can LTAs convert a cyclical business into a backlog business?  </li>
<li>Samsung Elec trades at 4.4x 2026 EPS, 3.1x 2027. That’s close to ridiculous, and really ridiculous if LTAs end the cyclicality of the Memory market.</li>
</ul>


Management says that Memory supply shortage will be worse in 2027 than in 2026 and will persist through 2028. 3Q26 HBM4 revenue will more than triple QoQ.
Memory Long Term Agreements signed with 5 largest data centre customers. Target coverage: 60% to 70% of planned capacity. Can LTAs convert a cyclical business into a backlog business?  
Samsung Elec trades at 4.4x 2026 EPS, 3.1x 2027. That’s close to ridiculous, and really ridiculous if LTAs end the cyclicality of the Memory market.


Samsung 2Q26: Record Revenue & Profit. Management Says Memory Shortage Deepening into 2027 and 2028.

Microsoft Corporation operates as a software company. The Company offers applications, extra cloud storage, and advanced security solutions. Microsoft serves customers worldwide.

<ul>
<li>4Q26 (Jun-26): small beat but the news is Azure: revenue up 43% YoY, previous quarters 40%, next quarter 45% growth YoY. Azure passed $100bn annual revenue in FY26, up 41%.</li>
<li>Commercial RPO (Remaining Performance Obligation) $678bn, +84% YoY. The sequential increase came from customers outside frontier model labs. </li>
<li>Microsoft was Free Cash Flow positive every quarter of FY26, expects to be positive in FY27. The stock is trading at 20x FY27 EPS, 16.8x FY28.</li>
</ul>


4Q26 (Jun-26): small beat but the news is Azure: revenue up 43% YoY, previous quarters 40%, next quarter 45% growth YoY. Azure passed $100bn annual revenue in FY26, up 41%.
Commercial RPO (Remaining Performance Obligation) $678bn, +84% YoY. The sequential increase came from customers outside frontier model labs. 
Microsoft was Free Cash Flow positive every quarter of FY26, expects to be positive in FY27. The stock is trading at 20x FY27 EPS, 16.8x FY28.


Microsoft: Cloud and AI Revenue Accelerating, Capex Will Increase in FY27

SK Hynix Inc. provides products and services for the electronic components industry. The Company manufactures semiconductors, such as dynamic random access memory (DRAM), NAND flash memory, and static random access memory (SRAM) chips.

<ul>
<li>2Q was a small miss, 5% below Consensus, as DRAM ASP increased less than Commodity DRAM. That’s mostly because of Long Term Agreements that are “designed to address price volatility”. </li>
<li>Add timing issues, HBM4 ramp, tech migrations to 1c-node for DRAM and 321-layer NAND and Management says that 2H26 will see 1) higher bit growth and 2) higher blended ASP. </li>
<li>In the meantime, the stock is crashing and trading at 5x 2026 EPS, 3.4x 2027.</li>
</ul>


2Q was a small miss, 5% below Consensus, as DRAM ASP increased less than Commodity DRAM. That’s mostly because of Long Term Agreements that are “designed to address price volatility”. 
Add timing issues, HBM4 ramp, tech migrations to 1c-node for DRAM and 321-layer NAND and Management says that 2H26 will see 1) higher bit growth and 2) higher blended ASP. 
In the meantime, the stock is crashing and trading at 5x 2026 EPS, 3.4x 2027.


SK Hynix: A Little Miss and a Big Correction

Intel Corporation designs, manufactures, and sells computer components and related products.  The Company's major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, systems management software, conferencing products, and digital imaging products.

<ul>
<li>Big beat. Revenue up 25% YoY driven by AI CPU demand. Gross Margin above 40%, improving pricing, manufacturing yields and loading, insourcing. 2Q26 is a major break thru for Intel.</li>
<li>2026 Capex increased slightly from ~18bn to above $20bn. 2027 capex up “significantly”. Intel is now showing real progress in yields, leading to insourcing (away from TSMC), hence higher margins.</li>
<li>2026 Consensus can be revised up ~20%. Bigger unknown is for 2027-28, Consensus could be revised up by 30-40%,  stock would be trading at ~40x 2027 EPS, ~25x 2028 EPS.</li>
</ul>


Big beat. Revenue up 25% YoY driven by AI CPU demand. Gross Margin above 40%, improving pricing, manufacturing yields and loading, insourcing. 2Q26 is a major break thru for Intel.
2026 Capex increased slightly from ~18bn to above $20bn. 2027 capex up “significantly”. Intel is now showing real progress in yields, leading to insourcing (away from TSMC), hence higher margins.
2026 Consensus can be revised up ~20%. Bigger unknown is for 2027-28, Consensus could be revised up by 30-40%,  stock would be trading at ~40x 2027 EPS, ~25x 2028 EPS.


Intel 2Q26: Big Beat Led by AI Data Center and Improving Foundry Execution

Nicolas Baratte has been a financial analyst since 2000, covering the Semiconductor sector and Global Technology. Nicolas has worked on the sell-side for JPMorgan, CLSA. On the buy-side for a Tiger fund and Prudential. Nicolas has covered semiconductors, Asian hardware and components, and the Global Tech supply chain. Nicolas lives mostly in Taiwan, sometimes in France and is in New York regularly.