11AM Hour: Thoma Bravo Managing Partner Holden Spaht, Kalshi Board Member on New York Lawsuit & Big Tech Earnings Breakdown 7/31/26

Key takeaways

Amazon's earnings reflect robust AI and cloud growth, leading to significant market cap gains and investor optimism.
Apple faces concerns over declining margins, rising memory costs, and uncertain AI strategy, resulting in a sharp stock decline despite a solid quarter.
AI represents a major opportunity for enterprise software, with companies shifting their focus from trials to measurable outcomes, demanding cost-effective solutions.
High interest rates, particularly a sustained 5% yield on the 10-year Treasury, could trigger a market correction or bubble burst, especially in AI stocks and tech valuations.
Kalshi, a prediction markets platform, is involved in ongoing legal battles with states over regulation, but it demonstrates strong growth potential as an innovative financial utility.

Summary

Tech Earnings Breakdown: Amazon and Apple

This section discusses the contrasting earnings reports from Amazon and Apple. Amazon reported strong growth driven by AI and cloud services, including triple-digit ARR growth in AWS and a surge in market cap. Analysts are optimistic about Amazon's faster-than-expected capex digestion and growth in cloud and AI sectors. Conversely, Apple shares declined over 9% after reporting a quarter with better-than-expected revenue and earnings but guiding future growth below expectations. Concerns are rising over declining margins, high memory costs, and a lack of clear AI strategy, which could impact its valuation and profitability.

The Software Sector and AI Investment Outlook

Thoma Bravo's managing partner, Holden Spaht, emphasizes that AI presents the biggest enterprise software opportunity since the advent of cloud computing. He highlights that a significant portion of new bookings (around 40%) in software are expected to come from AI, with companies increasingly integrating AI into core systems to convert trials into tangible outcomes. Spaht notes that deep domain knowledge combined with AI unlocks substantial enterprise value and that delivering AI inference economically will be crucial. He also discusses a shift in enterprise sentiment from early enthusiasm to a focus on measurable ROI, as well as the importance of speed in AI deployment for competitive advantage.

Legal and Regulatory Developments: Kalshi and Prediction Markets

Kalshi's board member, Brian Quintenz, responds to the recent lawsuit by New York State accusing Kalshi of illegal gambling. He defends the company's position, asserting that prediction markets are not gambling and that the lawsuit is unwarranted overreach. Quintenz explains that federal regulation pre-empts state laws in this area, and that prediction markets provide valuable, price-discovery functions. He mentions ongoing legal battles with other states and anticipates a Supreme Court ruling, which he expects could occur as early as this year or next. He also points out that market activity on Kalshi is growing, with increasing institutional interest, especially in hedging against macroeconomic events.

Show notes

We break down Amazon and Apple's latest quarters with both stocks heading in opposite directions today. Then, Thoma Bravo Managing Partner Holden Spaht joins to discuss how he's looking at the software sector right now. Plus, Kalshi Board Member Brian Quintenz joins with his reaction to New York State suing the prediction market company today.

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