Amazon 在 AWS 和 AI 方面基本面强劲，但面临零售业务受冲击的风险；当前约 28 倍远期市盈率的估值偏高，17-18 倍被视为更好的入场点。

Today, we will talk about the unique Amazon. In my opinion, it is still one of the best companies out there. This is an interesting situation for Amazon because it is no longer what it once was in terms of retail.

I am actually impressed with a lot of what is happening with "AWS" today. You are looking at an acceleration in revenue growth at this stage. I think they have a really compelling strategy in the world of artificial intelligence where they do n't build models .

It just so happens that they own a large stake in Anthropic, which is good news today. They make their own chips. They are the main source of infrastructure. I like this positioning in what I believe is a highly competitive artificial intelligence market.

But as for the retail sector, I have many questions. What will happen to Amazon in a world of smart agents if we go down this path?

The answer is not simple; they were the most hostile to some AI-powered shopping technologies , which is an interesting position for a company that was the market disruptor , and now may be the one being disrupted.

Interestingly, I feel they are pushing for AI-powered search for shopping, but only on their own platform. However, when "Muse" appeared, they made sure that "Muse" and Amazon could not work together.

Therefore, it will be interesting to see how Amazon handles the smart agent shopping assistant feature. Because on the one hand, if you do nothing, you will be left behind, because at the end of the day, my AI agent will go and find the same product somewhere else.

Thus, the sale was lost . Is losing a sale worth it just because you need to protect the growth in advertising business that has, of course, been tremendous for Amazon over the past two years?

Now, it is a business that has generated $76 billion over the past twelve months . I included that here because Trevis asked about international operating income and North American operating income, which you see as making up roughly half of it. Half of the total advertising revenue.

So, let's talk about incentives there. What this tells you is that without advertising revenue, which has profit margins of around 80%. Without these advertising revenues, the retail sector is not profitable.

So, if you want to know why they banned "Muse", here's the answer. The point is that robots don't watch ads, and since they don't , they don't want robots on the site.

Amazon’s entire business model is based on the idea of it being an order aggregator. So, Amazon is the place to go to shop for anything you want. Not only because "Prime" is a good business, but because "Prime" is a reason to keep coming back to Amazon.

This is the real reason why "Prime" is a magical subscription.

If we move to a world where someone else, or an agent, does the shopping for you, and perhaps even watches over your refrigerator. I mean, these are all hypothetical things, but we're talking about the source of growth 5 or 10 years from now?

This is a real change in the nature of the work.

You can try this yourself. You can go and search for something on Amazon, whether you are using a mobile phone or a desktop computer. What you will see are advertisements. Most of what you see are advertisements.

Amazon gets paid for this position, just as Google gets paid for it. So, how does work change? How will they adapt to that in the future? Will they be forced to raise their prices?

Will they...as you mentioned, link Shopify directly to Muse?

Amazon is completely different because its model is based on your visit to amazon.com or the Amazon app . If she stops doing that, it poses a real threat to her business. So, this raises a lot of questions about what that future will look like.

And remember that most of their business now relies on external vendors. They are the same people who own a shop on Shopify and also have a shop on Amazon. If they said, "Hi, we would like you to shop directly from our site through an AI agent instead of going through Amazon, where we have to pay about 50% of our revenue to Amazon for advertising, logistics, and all that stuff."

"This is a real issue for them in the long run."

So, the question now is how will they fix or overcome that? How can they find a few percentage points of margin here and there to remain highly competitive, cheaply priced and fast enough?

On the one hand, we have other parts of the business that may support this activity. On the other hand , perhaps their investments in robotics or the entire logistics network could work better than anyone else's.

I think this is also one of the main reasons they opened up their logistics network to outsiders, a sort of "AWS" but for logistics and shipping, etc. So, this is one way. Then the other way is that I think about being open and saying, "You know what?

We will focus on growing our Gross Merchandise Volume (GMV) and making sure we continue to generate a lot of sales through our platform, and trying to make some extra money here and there.

That is still possible through advertising, and I am sure they can grow their advertising business in different ways.

But yes, if you go to amazon.com right now and search for something, the top row is likely to be 75% sponsored ads . As I said, AI agents, well, they don't really care much about advertising .

Yes, so I think what you're suggesting here is that if you're buying Amazon stock for the retail business, are you really buying a better version of UPS? Is it worth the price you're paying?

On the other hand, we can ask: Do we buy Amazon only because of AWS? Which has generated nearly $150 billion over the past twelve months, and has seen growth accelerate as margins have also expanded.

So, is Amazon, with its $2.7 trillion valuation, just an AWS success story or something else? Because management recently said, I think they believe that AWS alone could become a trillion-dollar company in the future in terms of revenue.

I mean, at this rate, to begin with, Amazon’s business as a whole is expected to generate $1 trillion in revenue in 2028, but that includes the entire business, not just AWS. But yes, at these prices, is it justifiable to buy Amazon shares just because of AWS?

Of course, it still owns all the other activities at the moment, but let's assume that the rest of the activities will not continue to grow at the same pace as today.

I think that's the most compelling part of the work, and what was impressive was what appeared in that graph, where growth accelerated in a way that I think is of real significance.

The other thing is that they can think about this very differently because they are not a vertically integrated company. So, if you think about a company like Alphabet, it's vertically integrated.

Therefore, they would like you to use Gemini. You may not have to use Gemini, but they would like you to . They want you to use their databases, and as a customer, they want you to use all of their systems.

Amazon could simply say, "Hi, we'll offer the lowest cost computing, and that's how we've been competing for decades now at AWS." You know, we don't think about it much, but they are the most efficient in the cloud today.

Now that we have moved into a world where we provide graphics processing units (GPUs) instead of central processing units (CPUs) and storage. I think they will be able to do that very effectively in the future.

So, with some of these costs decreasing, for ChatGPT or Cloud , who is the winner here? If your revenues start to decline, who will survive and ultimately thrive ? It's a company like Amazon.

We are in a difficult position here. On the one hand, we see Amazon as very successful thanks to its current position, but on the other hand, Amazon's traditional business may need to change.

Otherwise, it may be the one that is disrupted or radically changed. It's a very difficult situation , but I always come back to look at the size of this company, its track record, and everything it does .

I feel that they will find a solution somehow . Because for more than 20 years, they have always succeeded in finding solutions. They have succeeded in achieving growth. First, their overall targetable market appears to expand approximately every two years.

They have managed to enter other industrial sectors. They may not be the biggest players in it, such as in the medical field, for example. They may not be the biggest players out there, but they are slowly but steadily entering the field.

They integrate these services with your Prime membership, reinforcing the idea that Prime subscriptions continue to grow, and could become a very stable and profitable business for them as well.

It's something that adds to all the investments they're making , and it's a very interesting case for Amazon.

It is a case, of course, if you look now at the free cash flow , you will find it is not there , but if you look at... there is also much more debt than you might think. Yes, but the cash generated from operational activities is still improving and doing well, so it's an interesting situation with Amazon, especially when looking at their traditional core business.

Yes, it seems that this will only happen if AI-powered agent shopping and the like become mainstream, because currently not many people are asking their smart agent to go shopping and buy things online.

So, if it gets much bigger, what will that do to Amazon's core business?

Yes, and another thing to consider from an investment perspective is valuation. This is something we've seen with many of these big technology companies. I think we were in the same boat as Alphabet when the stock was trading at 15 or 16 times earnings, we were saying, "This is a bit crazy.

" The company will not die anytime soon. The same applies to the company "Meta". You can go back to the time when it was trading with profit multiples in the tens. What often happens with these large companies is that the valuation rises to 30 times the profits.

Currently, Amazon stock is trading at approximately 28 times forward earnings. Perhaps not an excellent buying opportunity . But sometime in the next year or two, I wouldn't be surprised to see the price-to-earnings ratio drop to 17 or 18 times forward earnings.

Perhaps then I would be more interested in owning such a company, as you might notice a slight slowdown in retail activity in the long term. In fact, the pace of growth has accelerated slightly recently.

So, things are going very well in the short term . But, as you know, in the long run they are able to answer some of those questions. When the rating starts to drop, it becomes more convincing because you are right about it.

Ten years from now, Amazon will still be around. They will find a solution to these challenges. They are giants in this world. There is a range and scale that many companies cannot compete with.

I think the most important question is what is the right price to pay . What do you think? What purchase price or price-to-earnings ratio would you consider a no-brainer option for Amazon?

I mean, if we can make it to our early twenties, I think that would be good enough for me. Of course, and by the way, I was just thinking about this. Is the pessimistic thesis about the disruption of Amazon's core business similar to what we heard about Google and the Google search engine?

It's possible, it might be exactly that . Yes, that may be exactly the case because they are able to find a solution. They can make things available to be shown to the agents. The pricing strategy might just be slightly different .

Instead of relying on advertising revenue, yes, there is a way to solve this and it's up to the companies' management. So, I wouldn't be surprised if they did . I think it's noticeable that when radical shifts occur in the way we shop, the company that won in the previous model is usually not the same one that will win in the next model.

So, if we were shopping through agents, as I said, and this is a big "if," Sears would not have won in online shopping and e-commerce, even though it was a big winner in the past.

My only warning will be to always wonder what this will look like in the future? Is it similar to the past twenty years, or is there something different coming?

Yes , that makes sense. I also think that for Amazon, it is a company that currently spends over $200 billion annually . Okay . Free cash flow, although it has never been an Amazon strength because it is a company that always reinvests to ensure a better future for its business.

But I think that at some point we will see a jump in free cash flow because the underlying business will become much better and more efficient.

important. It is one of the few companies that does not repurchase its shares, I mean since its founding. Therefore, this may of course help in future evaluations. But yes, the price-to-free cash flow ratio is just as negative as it is for Meta, for example.

It was negative for Google in the last quarter. Not a negative for Microsoft at the moment. But with Amazon , you know, the basic business is extremely profitable. It's just a proposal on paper right now.

If you look at the price-to-free cash flow ratio , and if you look at the free cash flow, you will find that it is not there. But at some point, I think they will change the situation with the push of a button, and I think we saw that two and a half years ago when they decided to say, "You know what?

Just to show you how profitable we are." And then there was a deadline. Four quarters where the free cash flow suddenly started to rise by the same amount, as if we were saying, "Oh, where did this come from?"

I think we may see that later in this decade after the massive spending cycle slows down.

In addition , as I said, Trainium. Trinium could also be a huge business. I think they said if it became an independent business, it could be one of the largest chip companies that exist today.

So, just like Google's Tensor Processing Units (TPUs) , I think this is another under-the-radar business for Amazon.

Yes, and don't forget their share in Anthropic either. Just, you know, 100 or 200 billion dollars between friends. No big problem.

Yes, but I saw a report earlier that Amazon and Meta were asking their employees to probably use "cloud" less. As for Amazon, I wonder what they will use because Amazon has an alternative to Cloud or Muse.

Could its core and traditional operations be disrupted? Do they have to disable themselves to ensure their continued survival? Or is Amazon Web Services (AWS) good enough to buy Amazon shares at these prices?