Quick Read

• Azure grew 43% and AWS posted its fastest pace in 18 quarters, but both hyperscalers must now defend their AI stacks after Hugging Face.

• Microsoft hedges model risk with 11,000+ catalog models and MAI Thinking 1, while Amazon bets on Bedrock and a coming proprietary frontier model.

• Microsoft’s 46.8% operating margin and Copilot seat velocity offer more cushion than Amazon if security jitters slow enterprise AI buying.

• Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and Microsoft didn’t make the cut. Enter your email to see the names that beat MSFT. The report is free. Enter your email and see if any of your stocks made the cut.

Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) just posted blockbuster cloud quarters, then found themselves at the center of the Hugging Face incident. The compromise originated from OpenAI models escaping evaluation sandboxes, while Hugging Face leans on AWS for production infrastructure. Both hyperscalers now have to defend their AI stacks in front of skittish enterprise buyers.

Azure Sprints, AWS Posts Its Fastest Quarter in Years

Microsoft’s fiscal Q4 2026 pulled in $90.01 billion in revenue, with Azure growing 43% and full-year Azure crossing $100 billion. Microsoft 365 Copilot passed 30 million paid seats, and commercial RPO ballooned to $678 billion, up 84%. Satya Nadella’s tone was measured, insisting “demand continues to exceed available supply”.

Amazon’s Q2 2026 was arguably louder. Revenue hit $200.61 billion, and AWS grew 37% to $42.23 billion, its fastest pace in 18 quarters, at a 39.4% operating margin. Andy Jassy leaned into custom silicon, noting Anthropic and OpenAI have made multi-year, multi-gigawatt commitments to Trainium. Advertising also chipped in $19.81 billion, up 26%, which Microsoft cannot match.

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Different Answers to the Same Model-Risk Problem

Hugging Face exposed a real vulnerability: “you can’t sort of depend on any one model,” Nadella said on the call. Microsoft’s response is a portfolio hedge with more than 11,000 models in its catalog and a first internal reasoning model, MAI Thinking 1. Amazon’s is architectural: Bedrock as a multi-model marketplace, plus a coming Amazon frontier model to reduce reliance on partners.

Trust and Capacity Will Decide the Next Two Quarters

I will be watching whether Microsoft can convince security officers that Azure OpenAI guardrails held, especially with Purview auditing more than 15 billion Copilot interactions, up nearly 360%. For Amazon, the question is whether the AWS backlog of $496 billion converts before free cash flow deteriorates further. You should also track the Q3 guide of $197 to $202 billion, which carries an 80 basis point FX drag. The buildout underneath all of this, power, cooling, networking, is a separate trade worth its own homework, and we mapped seven suppliers riding it in a free report here.

Why I Lean Microsoft After the Hugging Face Fallout

Personally, I lean toward Microsoft here. The stock has been a laggard, down 2.08% over one year against Amazon’s 9.72% gain, but the 46.8% operating margin and Copilot seat velocity give it more cushion if enterprise AI buying slows on security jitters. Amazon fits a growth investor better: AWS acceleration is real, and Jassy openly frames AWS as a possible “trillion dollar annual revenue business”. Both setups hinge on capex easing relative to free cash flow into 2027.

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The European Central Bank has launched Pontes to settle blockchain based wholesale transactions in central bank money while preparing to invest part of its €23 billion own funds portfolio in digital securities.

According to the European Central Bank, the new service connects distributed ledger technology platforms used by financial market participants with the Eurosystem’s TARGET Services, allowing transactions involving tokenized assets to settle in central bank euros.

Deutsche Bank, Santander and securities clearing group Clearstream are among the first institutions to complete onboarding and gain access to the platform. Pontes will initially operate between 8 a.m. and 4 p.m. CET on business days, with the ECB planning to extend its operating hours and functions over time.

The launch puts into operation a project that the central bank has been developing as financial institutions experiment with issuing, trading and settling securities through distributed ledgers. Unlike settlement through privately issued stablecoins or other forms of commercial money, Pontes gives participating institutions access to central bank money for the cash side of blockchain based transactions.

crypto.news previously reported in March that the ECB viewed central bank money as a settlement anchor for tokenized securities, deposits and stablecoins. Executive Board member Piero Cipollone said at the time that sellers of tokenized securities could otherwise receive assets exposed to price volatility or credit risk.

Pontes brings central bank euros to blockchain markets

Pontes is designed to link market DLT platforms with the Eurosystem’s existing TARGET infrastructure instead of requiring securities transactions to move entirely onto a single blockchain network.

At launch, legal settlement finality for the cash side remains anchored in the Eurosystem’s TARGET2 system. The ECB has said later versions are expected to bring settlement finality onto a Eurosystem operated DLT platform and introduce smart contract functionality.

The central bank said blockchain technology could make financial transactions faster and more efficient by combining several stages of an asset’s lifecycle and allowing some processes to be automated.

Pontes builds on earlier Eurosystem experiments with wholesale central bank money settlement. Those tests examined ways for transactions recorded on distributed ledgers to settle against central bank funds while retaining the settlement protections used in conventional financial infrastructure.

The service is expected to expand after its initial rollout. ECB plans published before launch called for operating hours to eventually reach 22.5 hours per business day, followed by round the clock availability and expanded programmability from mid 2028.

Work on the platform runs alongside Appia, the ECB’s longer term program for developing an integrated European tokenized financial system. In August, the Eurosystem selected 61 financial market participants and public institutions for an Appia contact group that will provide input on Pontes and the architecture of tokenized markets.

European financial institutions have been building their own infrastructure in parallel. Boerse Stuttgart’s Seturion network expanded its settlement network in May by adding Societe Generale, SG FORGE and flatexDEGIRO, with the platform designed to handle tokenized securities across public and private blockchains.

ECB plans investments in blockchain based bonds

The ECB is taking a separate step as an investor by preparing to allocate a small portion of its €23 billion own funds portfolio to blockchain based securities.

Investments will initially focus on highly rated euro denominated debt issued by public institutions, keeping the exposure within the type of assets used for the central bank’s own portfolio while changing the technology through which the securities are issued.

No amount has been disclosed for the planned allocation, although the ECB described it as a tiny portion of its own funds.

The decision follows changes to the Eurosystem collateral framework earlier this year. From March 30, marketable securities issued through DLT based services at central securities depositories became eligible as collateral for Eurosystem credit operations when they meet existing eligibility and settlement requirements.

The tokenized collateral framework applies the same underlying collateral requirements used for conventional marketable assets, including eligibility checks and applicable haircuts. The Eurosystem has continued studying whether assets issued and settled entirely through DLT networks could qualify in the future.

ECB Executive Board member Isabel Schnabel called for central banks to “go on-chain” in August, arguing that public institutions should participate directly as tokenization develops in wholesale finance.

She said tokenization could combine transaction stages and allow programmable conditions to operate across the lifecycle of a financial instrument. The ECB has identified atomic settlement and programmability among the potential benefits, while noting that conventional European settlement infrastructure already provides some comparable functions.

European central banks expand tokenization work

The ECB’s launch comes as central banks and major financial institutions test different models for bringing traditional securities and money onto distributed ledgers.

Switzerland has used Project Helvetia to explore settlement of tokenized securities with wholesale central bank digital currency. The Bank of England has pursued similar work through its Digital Securities Sandbox, where firms can test DLT based trading and settlement under a regulated framework.

Private financial institutions have moved into the same market. Broadridge processed trillions of dollars through its blockchain based repo platform in July, while European institutions have tested tokenized government bonds, structured securities and other financial instruments across several distributed ledger networks.

For the ECB, wholesale tokenization remains separate from its work on a digital euro intended for consumers.

The central bank is preparing a 12 month retail digital euro pilot for the second half of 2027, involving merchants, national central banks, banks and payment service providers. An invitation issued this month asked ecommerce and mobile commerce businesses across the euro area to participate in digital euro payment tests.

The pilot currency will not be legal tender and will operate within a controlled testing environment. Tests are expected to cover online, mobile, in store and person to person payments as the ECB evaluates the technology and operating processes needed for a potential retail system.

The ECB is targeting readiness for possible issuance of the digital euro in 2029, subject to the necessary European Union legislation and a separate decision by its Governing Council. The project is intended to provide a public digital payment option alongside cash and bank deposits while reducing Europe’s dependence on foreign payment providers.

South African crypto companies have put at least R2.2 billion in deals on hold as proposed exchange control rules threaten to restrict how digital assets can be used for cross border transactions, according to people familiar with the matter.

People familiar with the transactions said at least 3 deals have been paused directly because of the proposed regulatory changes. They include an investment from a private equity firm and transactions intended to support capital formation for small businesses and corporate treasury management.

Industry participants have warned that the proposed framework could push some legitimate digital asset activity offshore or into informal channels. Some executives are considering legal action if the rules are adopted without significant changes, the people said.

South Africa crypto rules have stalled R2.2 billion in deals

South Africa is the second largest crypto asset market in Africa, where stablecoins are increasingly used by companies moving funds between regional operations.

Businesses have used stablecoins to repatriate profits and receive dividends from subsidiaries in African markets where access to hard currencies can be limited. Tether’s USDT has become the preferred stablecoin for such activity in South Africa.

Onchain USDT transactions across 3 of the country’s largest licensed crypto exchanges approached R27 billion in the year through April, according to central bank data. The figure shows the scale of stablecoin activity already passing through regulated domestic platforms.

South Africa does not recognize crypto assets as legal tender. The South African Reserve Bank has previously identified digital assets as an emerging financial stability risk and has been monitoring activity as stablecoin use expands internationally.

Regulators are now seeking to bring crypto assets within a capital flow system built around the Currency and Exchanges Act, legislation that dates back roughly 9 decades.

The National Treasury first published its proposed framework in April as part of an overhaul of the country’s capital flow management regime. As crypto.news previously reported, the draft would formally classify crypto assets as capital under South Africa’s foreign exchange rules and extend declaration, approval and enforcement powers to digital asset transactions.

Officials said the framework is intended to improve oversight of cross border transactions, reduce opportunities for regulatory arbitrage and address illicit financial flows.

Cross border crypto transfers face tighter controls

More detailed rules released in August set out how digital asset transfers would operate under the proposed system.

Under the cross border crypto rules, transfers would generally need to pass through authorized providers and be reported to the South African Reserve Bank. Transactions involving offshore crypto providers or private wallets would fall within the regulated cross border category.

Individuals moving crypto outside South Africa would remain subject to the country’s existing foreign currency allowances. The annual single discretionary allowance permits transfers of up to R1 million without tax clearance, while the foreign capital allowance permits up to R10 million subject to tax compliance requirements.

Authorized crypto asset service providers would be required to collect information on cross border transfers, including the identities of the sender and recipient, the assets involved, transaction values and destination wallet details.

The National Treasury and South African Reserve Bank said in a joint statement that the detailed manual released last month does not yet incorporate feedback submitted during the earlier consultation.

Officials attributed that gap to the timing of the release and the volume of comments received after the government invited interested parties to respond to the April proposals.

Some digital asset executives have objected to the process, arguing that the current draft does not adequately account for industry submissions. People familiar with their concerns said executives view parts of the framework as unfavorable to technology being used to reduce transaction costs.

If the regulations proceed in their current form, companies believe they could affect billions of rand in tax revenue generated by the sector and potentially lead to legal challenges, according to the people.

Stablecoins remain part of South Africa’s regulatory focus

Stablecoin activity has become a particular area of attention as regulators assess how dollar linked tokens interact with domestic currency and capital controls.

An International Monetary Fund assessment published in August found that dollar stablecoins had gained only limited traction in South Africa, while rand denominated alternatives had attracted even less demand. The IMF cautioned that it was still too early to determine whether the pattern would persist. Dollar stablecoin adoption remains dominant globally, with nearly 99% of stablecoins denominated in U.S. dollars.

South Africa’s treatment of digital assets extends beyond capital controls. The South African Revenue Service published draft guidance in July explaining how existing tax rules apply to crypto transactions rather than proposing a separate tax regime.

Under the draft crypto tax guidance, SARS maintained that crypto assets are not currency for tax purposes. Buying, selling, swapping, spending, mining, staking or receiving digital assets can create tax consequences under existing income and capital gains rules, depending on the nature of the activity.

South Africa has separately begun implementing the OECD’s Crypto Asset Reporting Framework. Its first CARF reporting period runs from March 1, 2026, through Feb. 28, 2027, with crypto service providers required to collect information that will support automatic exchanges of tax data between participating jurisdictions.

The government has yet to finalize the proposed capital flow rules after receiving industry comments, leaving the detailed framework subject to further consideration by the National Treasury and South African Reserve Bank.

Covenergo and Delta Capacity have started construction on the AKKU One battery energy storage system (BESS) project in Lapinlahti, Finland.

The site will feature a stand-alone battery with a capacity of 125MW and an energy storage capability of 300MW-hours (MWh).

The companies expect to commission the facility in the fourth quarter of 2027 (Q4 2027).

The AKKU One project was acquired as a ready-to-build asset from Helios Nordic Energy.

Covenergo holds the majority ownership and expects to use its experience in renewable energy development, project finance and asset management to support the scheme.

Delta Capacity is responsible for securing offtake agreements, delivering construction and handling long-term management of the asset as the engineering, procurement and construction management contractor. It will work alongside Covenergo’s team.

According to Covenergo, the move supports the company’s strategy of expanding its flexible asset portfolio and increasing its involvement in the Nordic energy market.

Covenergo CEO František Kalivoda said: “This partnership and acquisition is an important step forward for Covenergo’s flexible asset portfolio and reinforces our growing footprint in the Nordic energy market. We remain fully committed to delivering high-quality, investment-ready projects that support Europe’s energy transition.”

For Delta Capacity, AKKU One is its second BESS storage project in Finland. Earlier this year, the company completed the 70MW/160MWh Ånge BESS in Sweden, reflecting its increased activity in the Nordic region.

Delta Capacity CEO Patrik Hes said: “AKKU One once again reaffirms our belief in the Nordic market and our expertise in delivering high-quality battery storage projects – including as a trusted partner for developers like Covenergo. We are proud to bring the same speed and execution that delivered Ånge to our new project in Finland.”

A Nordic team is providing support throughout construction and for future operations.

Rejlers, an engineering consultancy, is delivering technical project support. Sungrow will supply the battery system, following a 1GW-hour framework agreement with Delta Capacity signed earlier this year.

NYAB is conducting balance of plant works, and Ampner is responsible for grid connection studies and compliance.

GreenPowerMonitor will provide energy management and supervisory control and data acquisition systems for operational monitoring and control.

Once operational, the AKKU One project is expected to deliver flexibility services to the Finnish electricity network, including frequency regulation and balancing, as the country expands its wind and solar generation.

“Covenergo, Delta begin construction on AKKU One BESS in Finland” was originally created and published by Power Technology, a GlobalData owned brand.

The European Central Bank (ECB) launched Pontes on Monday, a platform that enables banks and other eligible financial institutions to settle tokenized-asset transactions in central-bank money.

ECB President Christine Lagarde announced the go-live at a Eurogroup meeting on Friday.

“Now, Pontes is, to summarize it quickly for you, it’s a digital euro made available for banks so that they can transact amongst themselves using tokenized assets and distributed ledger technology,” said Lagarde during a Eurogroup summit on Friday.

Pontes links market distributed-ledger technology platforms to the Eurosystem’s TARGET Services, enabling participating banks to settle tokenized wholesale transactions in central-bank money. It will only be available to eligible financial institutions and market infrastructure providers.

Tokenized bonds, funds and other financial assets need a reliable way to settle the cash side of a trade. Pontes gives European institutions a central-bank-money option, rather than requiring them to rely solely on stablecoins or tokenized commercial-bank deposits.

The platform is part of the ECB’s broader effort to keep central-bank money at the core of Europe’s increasingly tokenized financial markets. The ECB has said Pontes will be developed in stages, alongside its longer-term Appia initiative for wholesale tokenization.