Zavier Wong, market analyst at eToro Group Ltd (Unlisted (US):ETRO), shares his three things to watch in Australia in the coming days.
RBA rate decision
When it comes to rate decisions in the modern day, there’s very rarely much surprise, but this week’s decision from the RBA could go either way. After last week's hotter-than-expected quarterly CPI print, rate futures now imply close to a 70% chance of a 25 basis point hike.
Inflation remains above target, and trimmed mean inflation is still sitting above the RBA’s 2% to 3% band. Combined with a labour market that continues to surprise to the upside, the data has strengthened the case that the RBA may need to act sooner rather than later. However, hiking rates now would represent a sharp reversal after the three 25 basis point cuts delivered in 2025, at a time when much of the global economy is already easing.
Either way, the decision is going to be finely balanced and will have markets on watch. A rate hike remains firmly on the table, but the RBA may opt to hold for now and reinforce a hawkish bias. That being said, it may be difficult for the board to justify sitting on its hands. Any signal that rates will stay restrictive for longer would keep pressure on rate-sensitive sectors and support the Australian dollar, while a hike this early into the year would force markets to reassess the year ahead.
Amazon earnings
Amazon kicks off a big week for markets, with investors focused on retail demand, AWS momentum and how aggressively the company is leaning into AI.
AWS remains Amazon’s key growth driver, supported by accelerating enterprise AI adoption and increased data centre capacity. However, this growth comes at a cost. Heavier investment in AI infrastructure is likely to pressure AWS margins in the near term, even as overall sales momentum strengthens. The focus for investors will be whether this increased spending translates into sustained demand and longer-term margin expansion.
Amazon’s advertising business is another key pillar to watch. It remains the company’s fastest-growing segment and is projected to generate around US$68 billion in revenue in 2025, up from just US$1.7 billion a decade ago. While growth has moderated slightly, it's an area of the business with very high margins and therefore a meaningful contributor to Amazon’s bottom line.
Closer to home, Amazon has recently announced a new grocery partnership in Australia with Harris Farm, further strengthening its local footprint. The move enhances Amazon’s same-day delivery push and adds more value to Prime memberships, an important move given that the majority of its gross transaction value is driven by subscription members.
AI will be front and centre on the earnings call. Amazon is reportedly in discussions to invest around $10 billion in OpenAI, deepening an already significant relationship. For Amazon, the focus is less about owning the AI model and more about monetising the infrastructure that powers it. Investors should also listen for updates on Cyber Week, tariff impacts, and, of course, any changes to capital expenditures.
Alphabet earnings
After Microsoft suffered one of its worst trading days in history last week on the back of soaring capex, Alphabet will need to show that its heavy AI investment is continuing to drive real growth, not just higher costs. And expectations will be high. It’s the best performing Mag 7 stock over the last year, with shares up 73% driven by renewed confidence in its AI strategy, resilience in Search advertising and improving cloud profitability.
For Alphabet, the key theme is Gemini. After a slow start, Gemini is gaining ground against OpenAI and reinforcing Google’s core Search business, where ad revenue has remained resilient. Crucially, there is still little evidence that generative AI is materially eroding search query volumes, easing concerns around long-term search disruption.
Beyond Search, Google Cloud is seeing growing demand from companies running AI workloads, helping Alphabet turn its AI investment into more tangible revenue, exactly what Wall Street wants to see. Apple’s decision to use Gemini within iOS is another huge win, lifting engagement and strengthening Alphabet’s ability to monetise AI across both cloud and its broader platform.
Across Big Tech, investors are now focused on return on investment rather than scale alone. With Microsoft and Meta already under pressure to justify rising capex, Alphabet’s commentary on AI monetisation, cloud margins and spending discipline will be critical as the AI arms race intensifies.