Investors are watching another round of corporate earnings this week while monitoring signs of progress in U.S.-China trade relations and the prolonged American government shutdown. Market sentiment remains largely steady despite uneven results among major tech companies.
BNN Bloomberg spoke with Richard Croft, chief investment officer at Croft Financial Group, about the drivers of current market performance, the outlook for Amazon’s AWS rebound, and growing concerns about circular financing within the AI sector.
Key Takeaways
- U.S. earnings have mostly beaten expectations but often missed high “whisper” forecasts.
- Amazon’s AWS rebound highlights how resolving supply issues can boost growth.
- Markets remain stable despite the ongoing U.S. government shutdown.
- Circular financing in AI firms raises red flags around debt, transparency and valuations.
- Investors are cautiously optimistic heading into year-end, even as private-market risks grow.
Read the full transcript below:
ANDREW: Investors are gearing up for yet more earnings this week, and there are signs of progress in the relationship between the U.S. and China on trade. But the U.S. government shutdown continues to drag on. Let’s get more from Richard Croft, chief investment officer at Croft Financial Group.
Richard, haven’t talked to you in ages. Thanks for joining us.
RICHARD: I was going to say the same thing — you’re looking well.
ANDREW: Thank you. You’re looking amazing. Talk to us about the market. What are you paying most attention to right now in equities, Richard?
RICHARD: Well, clearly earnings season is upon us, so that becomes the main thing to watch right now. Earnings in the U.S., the way I see it, are still being driven by artificial intelligence. The big tech companies are the ones driving performance. So far, the numbers have come in better than expected, but that’s not surprising. Most company management tends to talk down expectations before results come out.
That said, in many cases, results have come in below the so-called whisper numbers. That’s why we’ve seen some volatility in big tech names. I’d encourage investors to pay attention to the post-earnings conference calls. They can be very revealing.
For example, Amazon reported much better-than-expected results this quarter, particularly from AWS. Last quarter, CEO Andy Jassy talked about supply constraints holding AWS back. He turned out to be right, and they’ve managed to address much of that problem. As a result, AWS earnings accelerated this time.
Amazon shares dipped after the previous report due to slower AWS growth. But if that slowdown was purely supply-based, that might have been a buying opportunity. This company has many levers to pull, and I think it could be one of the surprise winners over the next year.
ANDREW: That’s interesting. So Jassy was indicating that Amazon could grow even faster in cloud services if it had more computing power and energy capacity.
RICHARD: Yes, that’s the issue. The energy component, in particular, isn’t something you can solve overnight. It takes time. But the fact that AWS turned around nicely this quarter speaks volumes. That’s going to continue and probably be one of the main drivers in the U.S. market.
As for Canada, I think raw materials will benefit — particularly rare earths and related sectors. I’m mildly bullish, despite signs that Berkshire Hathaway is raising a lot of cash, which suggests some caution about where things are headed.
ANDREW: You and other observers have been keeping an eye on the trend of circular investment, where, for example, Nvidia buys into a company on the condition that the company uses Nvidia’s products. That sort of “Magic Roundabout” has fallen apart before.
RICHARD: Yes, that’s one of the more interesting developments in the current market. It tends to happen after a strong growth phase. It’s especially relevant now because of how much capital is needed to train generative AI models.
Oracle was a prime example in its last earnings report — its growth was remarkable, largely due to a backlog of orders from clients like OpenAI. Those companies need computing power and data centres, which Oracle has to build. That means raising money, often through debt, while OpenAI helps fund the process.
It’s good for Oracle’s income statement, but it increases leverage. This circular financing works as long as companies like OpenAI can keep raising capital. But with OpenAI’s valuation now around half a trillion dollars in private markets, the question is how long that cycle can continue.
Much of the related debt is being raised privately, where there’s less transparency. That makes it harder to see how leverage could impact the broader economy. In public markets, you can track this through bond spreads, but not so much in private financing. Defaults in high-risk private debt are beginning to rise, and that’s creating some nervousness. It all ties back to that circular funding loop we’re seeing in the AI space.
ANDREW: Richard, thank you very much for joining us.
RICHARD: Good to see you.
ANDREW: Richard Croft, chief investment officer at Croft Financial Group.
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This BNN Bloomberg summary and transcript of the Nov. 3, 2025 interview with Richard Croft are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.