Episode Summary
The hyperscalers just published numbers that almost don’t seem real. Microsoft, Amazon and Alphabet hold a combined $1.46 trillion in remaining performance obligations, with $112 billion of capex spent in Q1 alone. Simon walks through where that money is going, why copper is the quietly compounding AI trade, and why Berkshire Hathaway’s $380 billion cash pile is now an obvious drag on the share price. Closer to home, tomorrow’s fuel price hike and Brent back at $114 keep consumer stocks under pressure.
Sponsored by Standard Bank Global Markets Retail & Shyft
What We Cover ๐๏ธ
- ๐๏ธ Powell stays through the May FOMC, Fed chair confirmation update
- ๐ Why copper is the quiet AI trade โ and the JSE plays that benefit
- โ๏ธ Hyperscaler RPOs: Microsoft $627bn, Alphabet $468bn, AWS $364bn
- ๐ฐ Berkshire Hathaway: $380bn in cash is roughly 38% of market cap
- ๐ค Using AI to write institutional-grade research (CMH initiation + earnings update)
- ๐พ Samsung, SK Hynix, Micron โ choosing pricing power over capacity
- โฝ Fuel price hike: consumers under pressure, Brent back at $114
- ๐ข๏ธ UAE withdraws from OPEC and OPEC+ โ the cartel’s grip is gone
Key Takeaways ๐ก
- ๐ Combined hyperscaler RPOs hit $1.46 trillion. Microsoft alone is up 51% year-on-year. Google’s book has roughly doubled quarter-on-quarter, with over 50% converting to revenue inside 24 months.
- โก The binding constraint is now power and data centre capacity, not demand. Q1 capex across MSFT, GOOGL and AMZN was $112bn โ and Google has guided to $180โ190bn for the full year.
- ๐ต Berkshire’s $380bn cash pile is an explicit drag with US markets at highs. The maths works in a crash; until then, it’s a third of the business earning a low single-digit yield.
- ๐ง Memory makers (Samsung, SK Hynix, Micron) are not adding capacity โ they are raising prices. SK Hynix sits on a forward PE of ~4.5, with FY26 revenue forecast up 239% and EPS up 384%.
- ๐ข๏ธ Brent at $114 means another fuel hike on Wednesday. Consumer stocks look cheap but the household squeeze isn’t over โ Simon’s watching, not buying.
Stocks & Markets Mentioned ๐
- AGL โ Anglo American โ copper exposure, merging with Canadian copper player
- BHP* โ BHP Group โ major JSE-listed copper producer
- SBCOP โ Standard Bank Copper ETN โ direct play on the copper price
- MSFT โ Microsoft โ Azure +40%, ending OpenAI exclusivity, $37bn AI revenue run-rate
- AMZN โ Amazon โ AWS +28%, $364bn RPO (ex-Anthropic deal)
- GOOGL โ Alphabet โ Google Cloud RPO doubled QoQ to $468bn
- ETF5IT* โ 1nvest S&P 500 Info Tech ETF โ Simon’s holding
- BRK.A / BRK.B โ Berkshire Hathaway โ $380bn cash, target prices on A-shares averaging ~$760k
- 005930.KS โ Samsung Electronics โ memory pricing power
- 000660.KS โ SK Hynix โ forward PE ~4.5, FY26 revenue forecast +239%
- MU โ Micron โ memory maker, AI tailwind
- CMH* โ Combined Motor Holdings โ Simon’s AI-generated coverage; 12-month target R81 vs ~R40 share price
- CPI โ Capitec โ referenced as the “next Capitec” benchmark for the 28 May Power Hour
- Brent crude โ trading $111โ114 vs $90 pre-Iran conflict
Listen & Subscribe ๐ง
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Wednesdays are all about hard-core investing and trading with Simon Brownโs WorldWide Markets podcast (previously JSE Direct). JSE Direct started life on ClassicFM in July 2008 and became a podcast in 2011. Every week Simon shares his views on the state of global economies, individual shares and events moving markets.
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