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Amazon Surges, Meta Sinks: The AI Spending Test · The SPY Trader

• 0:00
  Welcome back to Spy Trader .
• 0:02
  I'm your host , Barry Bullish , waking up bright and early .
• 0:06
  It's 6 am on Saturday , November 1st , 2025 , Pacific time , and we are diving straight into the endofweek action .
• 0:13
  What a close to October !
• 0:15
  The market managed to largely ignore a lot of macroeconomic noise , thanks entirely to the sheer strength of the megacap tech giants .
• 0:23
  The major indices closed the week and the month of October with solid gains .
• 0:29
  The Nasdaq Composite , proxied by the Invesco QQQ Trust , had the strongest performance , surging 2.2% for the week and closing at a new record high , significantly outperforming the broader SPDR S&P 500 ETF Trust , SPY .
• 0:46
  This strength was highly concentrated in sectors like Consumer Discretionary , driven almost entirely by Amazon , and Technology , fueled by AI infrastructure spending .
• 0:59
  We also got the widely anticipated Federal Reserve rate cut of 25 basis points , moving rates into the 3.75% to 4.0% range .
• 1:09
  However , Fed Chair Jerome Powell warned that further easing is 'not a foregone conclusion , ' which pushed bond yields higher , causing the 10year Treasury yield to rise and likely putting pressure on instruments like the iShares 20 Year Treasury Bond ETF , TLT .
• 1:27
  Adding to the macro uncertainty , the partial federal shutdown has entered its second month , creating a ' data vacuum ' by delaying key economic reports like the CPI and the official jobs report .
• 1:41
  The real engine driving the SPY higher was corporate earnings and the massive capital expenditure boom in AI .
• 1:49
  Amazon was a huge catalyst , surging nearly 10% after its Q3 results showed its critical cloud unit , AWS , jumped 20% , its fastest growth since 2022 .
• 2:03
  This relentless appetite for AI infrastructure also helped push Nvidia to become the world's first 5 trillion company .
• 2:11
  However , the market revealed its line in the sand with Meta Platforms .
• 2:17
  Despite beating estimates , Meta shares fell sharply — over 10% on one day — after the company raised its 2025 AI capital expenditure forecast to a staggering 70 to 72 billion , with an even ' notably larger ' spend anticipated for 2026 .
• 2:37
  This spooked investors concerned about margins .
• 2:41
  The overarching insight here is that the market is willing to tolerate macro uncertainty , like the cautious Fed and the government shutdown , because the dominant growth story in technology , which accounts for over 50% of the S&P 500's total earnings growth , remains absolutely intact .
• 3:00
  For your portfolio , we are still seeing narrow breadth , meaning few stocks are driving the overall indices like SPY .
• 3:09
  Our first recommendation is to maintain your core US equity exposure using a diversified largecap ETF like Vanguard S&P 500 ETF , VOO , to capture the robust S&P 500 earnings while mitigating singlestock risk .
• 3:26
  Second , overweight the sectors leading the charge .
• 3:29
  This means tilting toward the Invesco QQQ Trust or the Technology Select Sector SPDR Fund , XLK .
• 3:38
  These instruments directly benefit from the continued AI and cloud capex boom , exemplified by the massive outperformance of Amazon , AMZN .
• 3:48
  Finally , on the fixedincome side , be cautious .
• 3:51
  Since the Fed tempered rate cut expectations , longerduration bonds like TLT are inherently risky as yields rose .
• 3:59
  We recommend sticking to a moderateduration instrument like the iShares Core U.S.
• 4:03
  Aggregate Bond ETF , AGG , which offers more diversification than longterm Treasuries alone Remember , watch Meta Platforms closely ; its sharp decline shows the market is demanding that massive AI spending eventually translates into profit , not just promise .