Earnings Upside Meets Monetary Tailwinds.

Happy Friday!

It was a strong week across the board. Four companies in our portfolio reported, along with others. This includes Zillow, Omnicell, and Mister Car Wash from our portfolio. All delivered solid results and saw positive market reactions. Meta was the exception, trading lower despite exceptional fundamentals. It remains the only mega cap name outside NVIDIA growing around 26% Y/Y and reaffirming its deep commitment to AI investment.

The Fed’s rate cut this week adds another tailwind for markets. While the effects will take time to flow through the economy, it is a clear net positive for growth and valuations. We see potential for another cut in December, with January looking increasingly likely.

Earnings season overall continues to surprise to the upside, reinforcing the health of both consumer and enterprise spending. Looking ahead, we will shift focus to the emerging CAPEX binge, where hyperscalers and major platforms are directing unprecedented investment toward AI infrastructure and compute capacity.

Let’s get into the data!

Here is the summary if you want just that:

• Meta outgrowing everyone.

• Zillow signals mid teens 2026 growth.

• CAPEX continues…

• Global PMI rebounding.

• Rate cuts > hikes.

Lets start here. As I mentioned, Meta continues to lead all peers not named Nvidia in revenue growth, posting +26% Y/, the strongest among large-cap tech. This outperformance underscores how engagement, advertising demand, and AI-driven product integration are translating directly into revenue momentum. Hard to say AI isn’t helping.

Both Meta and Microsoft maintain the margins to support this level of investment, each operating with 40–45% margins. Amazon remains the margin laggard despite incremental progress, while Google’s profitability has stayed steady near 30%. These margin dynamics matter, as they determine how much flexibility each company has to fund the next wave of infrastructure buildout.

Meta is currently leading the CAPEX-to-revenue cycle, allocating roughly 36% of revenue to CAPEX the highest among the group. This reflects an aggressive push to scale compute capacity for AI workloads. Zuck hinted at some breakthroughs happening, so lets see what that entails when they release their latest models.

Amazon, in contrast, maintains the lowest CAPEX-to-revenue ratio at 19%, constrained by thinner margins. It continues to invest, but at a slower pace relative to peers, limiting its ability to match the AI and data infrastructure intensity of Meta, Google, and Microsoft. Some may say that is a good thing.

Now Google is also ramping CAPEX again, reaching 23% of revenue, supported by robust cash generation and stable margins. Much of this is tied to AI data center investments and TPU infrastructure expansion. The thing here is that they saw a backlog grow 46%, which is giving them plenty of cover.

The last one is Microsoft. They are also accelerating CAPEX, now approaching 25% of revenue, reflecting sustained Azure demand and AI-related growth. With one of the strongest balance sheets and margin profiles in the group, Microsoft remains in a nice position to fund long-term infrastructure expansion without compromising profitability yet. Overtime we will see though where this plays out.

Turning to Zillow, the team delivered another strong quarter with +16% Y/Y revenue growth to $676M, roughly in line with hyperscalers despite operating in a soft housing market and without heavy CAPEX requirements (interesting). EBITDA came in at $165M, at the high end of guidance.

Rentals surged 41%, and Mortgages climbed 36%, showing broad-based strength across the housing ecosystem. Engagement remains healthy with 250M MAUs and 2.5B visits. The company also announced a partnership with ChatGPT, becoming the only real estate app to do so.

Most importantly, management guided that 2026 should look similar to 2025, implying mid-teens revenue growth and roughly a 2% margin lift, which translates to around 20% earnings growth ahead.

I included this because the implications could be powerful. Global monetary policy is turning more stimulative again, with rate cuts now outpacing hikes across most major economies. Historically, these inflection points tend to coincide with recoveries in global manufacturing activity, a trend that now appears to be stabilizing. The combination of easing financial conditions and steadying industrial demand could set the stage for a broader economic reacceleration. Market is NOT ready for this.

That is all! More earnings next week!

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About Avory & Co.

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Avory specializes in high-conviction equity strategies, emphasizing Secular Growth and Transformation Stories driven by exceptional teams. Data guides decisions. We cater to high net worth investors, family offices, and institutional investors. Note: This information doesn't constitute a recommendation to buy or sell any mentioned securities. Avory is based in Miami, Florida with clients all across the globe.

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Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.