Trade Alert & Portfolio Update
Happy Friday,
Microsoft, Alphabet, and Amazon all reported this week, and the reaction from the market shows investors are now becoming much more concerned with AI spending and the timeline for returns on their spending commitments.
Also, I just closed our short-term Amazon earnings bet for a small loss.
Today we will review the big earnings reports, my trade update, I’ll share a full portfolio update and the prices I’m considering adding to certain stocks with our cash.
PORTFOLIO PERFORMANCE
Total return since inception: +296%
CAGR: 39%
1-year return: +83%
YTD return: +67%
1-month return: +3%
S&P 500 over the same period: +93%
That’s roughly 200 percentage points of outperformance since inception.
The Amazon Trade, Portfolio Update, & Watchlist Prices
Yesterday morning I took AMZN to roughly half the portfolio at $246.45 as a short-term earnings bet. This morning I sold most of it back down at $238.73, a roughly 3% loss on those shares, which works out to a roughly 1.5% drop for the whole portfolio.
AMZN is back to a 10% position, which is where I’m comfortable holding a long-term position, and cash is back to 43%.
I made the short-term earnings bet because I thought AWS would show the same acceleration Azure and Google Cloud had just shown, and it did: AWS grew 39%, its fastest in almost five years. What I got wrong is that it no longer matters to the market. At least not over the short-term. The market’s focus changed this week from “is AI demand real” to “what is it costing you,” and Amazon’s trailing free cash flow of negative $42.4 billion on roughly $220 billion of full-year capex overshadowed the strong AWS numbers.
I had the right thesis on the business, but the wrong read on what the market would pay for it. That’s why short-term trades are so hard and often lose money.
Overall, we’ve done fine on our recent short-term trades: the META re-rating bet made real money. The SQQQ hedge made money. This one lost money. That’s 2 out of 3 that worked out, and more broadly, rotating out of the AI infrastructure and more momentum-driven stocks a couple of months ago saved us from a major drawdown.
Expect fewer short-term trades and more focus on finding great companies at good prices, then managing positions if prices get excessive. I’m much better at that and it’s much more sustainable for people with busy lives.
Guessing one-day market reactions is not a game anyone is reliably good at, and I’d rather spend those hours on research or doing things outside of the market.
Quick AMZN and GOOGL Earnings Recaps
Amazon. Revenue of $201.9 billion, up 12%, with about 4 points of growth parked in Q2 by the Prime Day timing shift. AWS at $46.0 billion grew 39% with segment operating income of $17.8 billion, and total operating margin hit 13.9%, the highest in company history. Q4 guidance of $240 to $247 billion with operating income guided well above last year. The business is excellent. The stock fell anyway on negative free cash flow, and I intend to hold a 10% position long term.
Alphabet. Google Cloud grew 103% to $30.7 billion, accelerating from 63% in Q1 and 82% in Q2, which is a staggering number at this scale. But search grew 12%, down from 19% at the start of the year; quarterly capex hit $51.4 billion, with 2027 guided to increase significantly; free cash flow was negative for a second straight quarter; and Alphabet sold $28.7 billion of debt during the quarter. The stock fell hard. Cloud strength couldn’t outweigh a slowing core business paying for an accelerating buildout partly with borrowed money.
The read-through for us. Microsoft was the tell: Azure grew 48%, and the stock rose because capex came in below what the market feared. Spending discipline is now worth more than revenue acceleration. That’s the regime I positioned for with the hedge and the cash; it’s why the portfolio owns self-funding businesses, and it’s why I’m not in a hurry to deploy what’s left.
CURRENT PORTFOLIO
As of this morning:
MELI at 10%. $1,632.09, cost basis $1,848.63, down 12%...
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© 2026 Austin Lieberman
548 Market Street PMB 72296, San Francisco, CA 94104