WEBVTT - Instant Reaction: Amazon Boosts Spending Far Ahead of Estimates 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.160 --> 0:00:13.760 This is a breaking news update from Bloomberg, instant. 0:00:13.360 --> 0:00:17.440 Reaction and analysis from our three thousand journalists and analysts 0:00:17.520 --> 0:00:18.439 around the world. 0:00:19.280 --> 0:00:20.560 So this is for the fourth quarter. 0:00:20.600 --> 0:00:23.120 The look back, we are looking at EPs a dollar 0:00:23.239 --> 0:00:25.160 ninety five a share. 0:00:25.200 --> 0:00:27.440 That's a penny light from what the street was expecting. 0:00:27.480 --> 0:00:31.760 Fourth quarter operating margin that came in smack in line 0:00:31.800 --> 0:00:34.920 with what the street was forecasting eleven point seven percent. 0:00:35.320 --> 0:00:38.840 Here's to the outlook. Amazon ce's first quarter net sales 0:00:38.920 --> 0:00:41.600 one hundred and seventy three point five billion to one 0:00:41.680 --> 0:00:45.559 hundred and seventy eight point five billion. The estimate on 0:00:45.600 --> 0:00:46.960 the street kind of in the middle of that one 0:00:47.080 --> 0:00:51.080 hundred and seventy five point fifty four billion, So maybe 0:00:51.120 --> 0:00:53.880 potentially it could be below that based on that range. 0:00:53.920 --> 0:00:57.960 Taking a look at shares of Amazon low in the aftermarket. 0:00:57.320 --> 0:00:59.840 Done by about four point four percent, now three point 0:01:00.160 --> 0:01:02.840 nine percent, bouncing around a little bit, but still lower 0:01:02.880 --> 0:01:03.800 by two and a half percent. 0:01:03.840 --> 0:01:05.880 Now, yeah, they are definitely bouncing around. So let's see, 0:01:05.959 --> 0:01:07.200 let's go through some more than numbers. 0:01:07.280 --> 0:01:09.640 Yeah, the one that you hit that really sticks out, Carol, 0:01:09.720 --> 0:01:13.000 is first quarter net sales. That outlook sees net sales 0:01:13.000 --> 0:01:14.920 one seventy three and a half to one seventy eight 0:01:14.959 --> 0:01:17.920 and a half billion dollars. That's within estimates of one 0:01:18.000 --> 0:01:21.399 hundred and seventy five point five to four billion. Amazon 0:01:21.440 --> 0:01:25.240 ce's first quarter operating income coming in. This is really light, 0:01:25.480 --> 0:01:27.480 sixteen and a half billion to twenty one and a 0:01:27.520 --> 0:01:31.080 half billion. The estimate was for twenty two point twenty 0:01:31.120 --> 0:01:34.720 four billion dollars, so profit expected to take a hit, 0:01:34.760 --> 0:01:38.039 at least not looking like what analysts wanted to see. Again, 0:01:38.080 --> 0:01:40.520 twenty two point two four billion is what analysts wanted 0:01:40.520 --> 0:01:43.400 to see. First quarter operating income set to look sixteen 0:01:43.440 --> 0:01:45.520 and a half to twenty one point five billion dollar. 0:01:45.560 --> 0:01:47.240 All right, let's continue with the look back there. 0:01:47.280 --> 0:01:50.080 Fourth quarter North America net sales one hundred and twenty 0:01:50.120 --> 0:01:54.400 seven point zero eight billion. The estimate was slightly above 0:01:54.480 --> 0:01:57.880 that at one twenty seven point twenty one billion. 0:01:57.920 --> 0:02:00.360 You've seen this capex number. Now we're getting the good stuff. 0:02:00.480 --> 0:02:04.040 Twenty twenty six capecks about two hundred billion dollars. That 0:02:04.320 --> 0:02:08.320 way exceeds estimates. That estimate was for one hundred and 0:02:08.360 --> 0:02:11.800 forty six point one one billion dollars shares moving lower 0:02:11.800 --> 0:02:14.160 in the after hours, now down by about seven percent 0:02:14.240 --> 0:02:14.840 eight percent. 0:02:15.160 --> 0:02:17.120 All right, so we are seeing some pressure here. Hey, 0:02:17.200 --> 0:02:18.720 let's go through. There's more results. 0:02:19.200 --> 0:02:22.000 As we mentioned, net sales two hundred and thirteen point 0:02:22.000 --> 0:02:24.240 thirty nine billion for the fourth quarter. The estimate on 0:02:24.280 --> 0:02:26.239 the street was two hundred and eleven point forty nine 0:02:26.240 --> 0:02:28.320 billion according to Bloomberg consensus. 0:02:29.240 --> 0:02:29.960 Physical stores. 0:02:30.040 --> 0:02:32.519 Let's actually go to online stores net sales eighty two 0:02:32.520 --> 0:02:36.040 point ninety nine billion. That's pretty much what the street 0:02:36.080 --> 0:02:38.760 was expecting. The estimate was for eighty two point three 0:02:38.760 --> 0:02:42.880 billion dollars. AWS net sales thirty five point fifty eight 0:02:42.960 --> 0:02:47.200 billion was the quarterly results for the fourth quarter. Estimate 0:02:47.280 --> 0:02:49.640 was for thirty four point eighty eight billion dollars, so 0:02:49.680 --> 0:02:51.840 a little bit better than what the street was expecting. 0:02:53.280 --> 0:02:55.400 And let's go to we saw the EPs. That was 0:02:55.400 --> 0:02:57.120 a penny light. Where else do you want to go? 0:02:57.240 --> 0:02:59.799 I want to go to some commentary Amazon. I'm looking 0:02:59.840 --> 0:03:03.520 through the press release, sees twenty twenty six capex again 0:03:03.600 --> 0:03:06.440 two hundred billion, estimates of one hundred and forty six 0:03:06.480 --> 0:03:09.040 point one one billion. That's the headline. That's the story. 0:03:09.320 --> 0:03:11.600 We're going to stick to that one. Throughout the program, 0:03:11.639 --> 0:03:14.360 we are going to get additional details. For example, Amazon 0:03:14.440 --> 0:03:17.799 saying that demand is strong for AI, for chips, robotics, 0:03:17.800 --> 0:03:21.320 saying strong demand for its existing offerings. I'm looking through 0:03:21.360 --> 0:03:23.760 the press release, right, Can I just say, please God. 0:03:23.480 --> 0:03:26.119 That strong is demand for their shares? Because that's doc 0:03:26.240 --> 0:03:28.639 Right now. Amazon shares are down about nine percent tim 0:03:29.000 --> 0:03:30.000 in the aftermarket. 0:03:30.080 --> 0:03:32.800 The company is saying that aws growing twenty four percent, 0:03:32.840 --> 0:03:36.320 our fastest growth in thirteen quarters, Advertising growing twenty two percent, 0:03:36.360 --> 0:03:40.440 stores growing briskly across North America, International chips business growing 0:03:40.440 --> 0:03:43.560 triple digit percentages year over year. This growth is happening 0:03:43.600 --> 0:03:46.440 because we're continuing to innovate at a rapid pace and 0:03:46.480 --> 0:03:49.720 identify and knockdown customer problems. This is a quote from 0:03:49.720 --> 0:03:53.000 Andy Jasse, President and CEO of the company. He says, quote, 0:03:53.120 --> 0:03:56.000 with such strong demand for our existing offerings and seminal 0:03:56.000 --> 0:03:59.560 opportunities like AI, chips robotics, and low Earth orbit satellites, 0:04:00.040 --> 0:04:03.080 we expect to invest about two hundred billion dollars and 0:04:03.160 --> 0:04:06.360 capital expenditures across Amazon in twenty twenty six and anticipate 0:04:06.400 --> 0:04:10.040 strong long term return on invested capital. That two hundred 0:04:10.080 --> 0:04:15.040 billion dollars is not what investors were expecting. Again, investors 0:04:15.080 --> 0:04:17.159 were expecting one hundred and forty six point one to 0:04:17.160 --> 0:04:20.960 one billion dollars. That is a huge increase from those expectations. 0:04:21.040 --> 0:04:23.440 Yeah, right now, shares of Amazon, they're down about ten 0:04:23.600 --> 0:04:27.560 almost eleven percent here in the aftermarket. So that capex line, 0:04:27.600 --> 0:04:29.840 just like we saw play out with Alphabet last night, 0:04:29.960 --> 0:04:32.960 a bit of a shocker, and certainly initially we have 0:04:33.640 --> 0:04:36.800 investors not liking that number. So again Amazons seeking now 0:04:36.839 --> 0:04:40.240 eleven percent on that higher than expected twenty twenty six 0:04:40.320 --> 0:04:44.200 capex for cast. We also mentioned that companies forecast for 0:04:44.240 --> 0:04:46.320 the first quarter in terms of net sales one hundred 0:04:46.360 --> 0:04:49.039 and seventy three point five to one hundred and seventy 0:04:49.080 --> 0:04:52.080 eight point five billion. Street estimate was for one hundred 0:04:52.120 --> 0:04:54.839 and seventy five point fifty four billion. So maybe a 0:04:54.880 --> 0:04:59.640 combination of potentially a lower mark when it comes to 0:04:59.680 --> 0:05:03.040 first order net sales along with that higher capex certainly 0:05:03.040 --> 0:05:05.880 creating some stress in terms of investors. The share price 0:05:05.960 --> 0:05:07.960 now down about ten percent tim in the aftermarket. 0:05:08.160 --> 0:05:10.320 Looking through other highlights. I mean, this is a very 0:05:10.360 --> 0:05:13.400 long press release that goes through what the company has 0:05:13.480 --> 0:05:17.760 done over the last quarter, new agentic capabilities in aws Transform, 0:05:17.880 --> 0:05:21.559 new Agentic AI capabilities for Amazon Connected. It's an AI 0:05:21.600 --> 0:05:25.240 tool that the company says enables contact centers to provide consistent, 0:05:25.560 --> 0:05:30.640 personalized customer service experiences. AWSAI factories fastest speeds ever for 0:05:30.720 --> 0:05:34.400 Prime members globally in twenty twenty five shares, though still 0:05:34.440 --> 0:05:36.240 taking a hit in the after hours, down more than 0:05:36.279 --> 0:05:36.800 ten percent. 0:05:36.920 --> 0:05:38.400 I also want to point out, in terms of the 0:05:38.400 --> 0:05:41.800 guidance that we're getting from Amazon, they are saying that 0:05:41.800 --> 0:05:44.560 the Amazon guidance assumes no additional restructurings. 0:05:44.800 --> 0:05:45.960 Those restructurings, I. 0:05:45.960 --> 0:05:47.479 Guess you could go as far as to say whether 0:05:47.560 --> 0:05:50.080 or not there's more layoffs. Keep in mind, we just 0:05:50.120 --> 0:05:52.159 heard at the end of January, right that this company's 0:05:52.200 --> 0:05:56.960 cutting sixteen thousand corporate jobs worldwide in an effort to 0:05:57.000 --> 0:06:00.800 remove layers of bureaucracy and increase ownership. So we saw 0:06:00.839 --> 0:06:04.479 this company, I'm certainly announcing some movements. 0:06:04.000 --> 0:06:04.920 Some restructuring. 0:06:05.279 --> 0:06:07.599 So we'll have to get some more clarity about what 0:06:07.640 --> 0:06:10.560 that means, what possible additional restructurings could be coming. 0:06:10.600 --> 0:06:11.560 We'll look for that on the call. 0:06:11.640 --> 0:06:14.960 Yeah, just looking at some updates here twenty twenty six CAPEX. Again, 0:06:15.000 --> 0:06:17.000 this is the story here. This is the headline. Two 0:06:17.120 --> 0:06:20.119 hundred billion dollars above the average estimate of one hundred 0:06:20.120 --> 0:06:22.320 and forty six point one one billion dollars. 0:06:22.320 --> 0:06:24.120 All right, let's get to it. Punam goils with us. 0:06:24.200 --> 0:06:26.479 She's senior analyst for e commerce and at leisure for 0:06:26.480 --> 0:06:29.440 Bloomberg Intelligence. She joins US for BI headquarters out there 0:06:29.480 --> 0:06:30.040 in Prince. 0:06:29.800 --> 0:06:30.480 Of New Jersey. 0:06:30.800 --> 0:06:33.279 Punham investors not loving it. Is it all about that 0:06:33.320 --> 0:06:34.119 CAPEX number? 0:06:35.200 --> 0:06:37.400 You know it is? But I think the CAPEC summer 0:06:37.520 --> 0:06:39.600 is fine. We were looking for one hundred and forty 0:06:39.640 --> 0:06:43.400 billion dollars. Two hundred billion dollars just continues to show 0:06:43.440 --> 0:06:44.719 that they're investing. 0:06:44.400 --> 0:06:47.280 And I think, wait, that's sixty billion dollars more. 0:06:48.000 --> 0:06:48.839 That's a lot of money. 0:06:48.960 --> 0:06:51.919 So yes, but they need to invest, right. We know 0:06:52.000 --> 0:06:54.600 that Amazon has to continue to invest in cloud services, 0:06:54.640 --> 0:06:57.120 it needs to invest in AI. So there's a lot 0:06:57.120 --> 0:06:59.839 of ketchup that needs to be done here. I think 0:06:59.839 --> 0:07:03.520 the long run narrative here is still good. The underlying 0:07:03.560 --> 0:07:07.560 results were solid across both a WUS and retail. 0:07:08.080 --> 0:07:10.960 Interesting and so even though they talked about seeing first 0:07:11.000 --> 0:07:13.840 quarter net sales one hundred and seventy three point five billion. 0:07:13.880 --> 0:07:16.040 Tw one hundred and seventy eight point five billion Street 0:07:16.160 --> 0:07:18.200 estimate is kind of in the middle of that one 0:07:18.240 --> 0:07:19.440 seventy five point fifty four. 0:07:19.720 --> 0:07:21.920 That's okay, Yeah, that's okay. 0:07:21.960 --> 0:07:25.200 Like the results are good to okay. I think the 0:07:25.320 --> 0:07:28.760 numbers show that Amazon continues to plug away across its 0:07:28.800 --> 0:07:33.240 businesses and it is making progress. And I mean, we're 0:07:33.360 --> 0:07:36.320 happy with those numbers. We think it's making the right investments, 0:07:36.320 --> 0:07:38.600 we think it's moving in the right direction, and we 0:07:38.680 --> 0:07:41.720 think it's growing profitably. The North America profit margins were 0:07:41.760 --> 0:07:45.280 better than expected, and aws A thirty five percent is 0:07:45.320 --> 0:07:46.160 still respectable. 0:07:46.800 --> 0:07:47.120 Okay. 0:07:47.160 --> 0:07:50.600 So if we're if we're not too concerned about the 0:07:50.840 --> 0:07:54.280 capex here, why are we seeing investors react like this, 0:07:54.560 --> 0:07:57.160 down as much as ten percent in the after hours, 0:07:57.200 --> 0:07:59.440 down as much as eleven percent in the afternoon. 0:07:59.640 --> 0:08:01.800 I think, I think we'll have to see what they 0:08:01.840 --> 0:08:04.760 say on the call on where this capex is exactly going, 0:08:04.800 --> 0:08:07.560 what the backlog looks like. I think the call will 0:08:07.560 --> 0:08:11.640 give us a little more insight onto where they are investing, 0:08:11.680 --> 0:08:15.120 and they'll be important. But I think, you know, expecting 0:08:15.440 --> 0:08:18.360 higher Capex, and what we had thought yesterday, especially after 0:08:18.400 --> 0:08:21.280 Alphabet's result, was what we were kind of expecting. 0:08:21.640 --> 0:08:24.040 So the reason Carol and I are like fighting to 0:08:24.040 --> 0:08:26.080 get to ask you this question because maybe we're maybe 0:08:26.080 --> 0:08:29.360 we're going to the same place. So Andy Jasse in 0:08:30.560 --> 0:08:33.640 his press release, in his comments, actually has two sentences here, 0:08:33.640 --> 0:08:35.960 and one of them does mention the two hundred billion 0:08:35.960 --> 0:08:40.280 dollars in Capex, but he says there are seminal opportunities 0:08:40.480 --> 0:08:45.679 like AI chips, robotics, and low Earth orbit satellites. Therefore, 0:08:45.720 --> 0:08:47.720 we expect to invest about two hundred million dollars in 0:08:47.760 --> 0:08:53.480 Capex across Amazon in twenty twenty six. Of those AI chips, robotics, 0:08:53.480 --> 0:08:57.320 low Earth orbit satellites, where do investors want to see 0:08:57.320 --> 0:08:59.680 the investment? Would they rather see them in AI and 0:08:59.760 --> 0:09:02.600 Chip than in lower orbit satellites. I mean, SpaceX kind 0:09:02.600 --> 0:09:04.160 of owns that I. 0:09:04.360 --> 0:09:06.320 Would agree with you there. I would like to see 0:09:06.520 --> 0:09:09.679 more on their core business rather than innciliary businesses. 0:09:10.200 --> 0:09:12.000 So one of the things that caught my attention, I'm 0:09:12.000 --> 0:09:14.640 thinking about, you know, the jobs that they are already cutting, 0:09:14.679 --> 0:09:19.480 those corporate jobs. We got that late January Punam Amazon 0:09:19.640 --> 0:09:23.600 saying guidance that they put out assumes no additional restructurings. 0:09:23.840 --> 0:09:26.320 How do you what you read on that is? Is 0:09:26.360 --> 0:09:27.320 it yeah? 0:09:27.440 --> 0:09:30.040 I'm just curious, is it more job cuts other shifts? 0:09:30.880 --> 0:09:32.320 How what's our takeaway there? 0:09:33.160 --> 0:09:35.400 I think you'll continue to see job cuts. I don't 0:09:35.440 --> 0:09:38.320 think we're over. You know, they've highlighted it pretty clearly 0:09:38.400 --> 0:09:41.800 in their shareholder letter last year that AI is going 0:09:41.840 --> 0:09:45.160 to allow them to pair back on jobs, especially when 0:09:45.200 --> 0:09:46.760 it comes to some of those jobs that can be 0:09:46.800 --> 0:09:50.640 automated in the distribution centers and the logistics and in 0:09:50.679 --> 0:09:53.560 the technology workspace. So I don't think it's over. I 0:09:53.559 --> 0:09:55.800 think there's more to come. But I do think that 0:09:56.800 --> 0:10:00.120 they started and they're continuing to just push through what 0:10:00.160 --> 0:10:01.840 their original plans were for now. 0:10:02.200 --> 0:10:04.680 In terms of operating margin, eleven point seven percent, so 0:10:04.720 --> 0:10:07.160 that was bang in line with what the street was expecting. 0:10:07.400 --> 0:10:10.880 They're managing costs, they're getting ahead of things there. That 0:10:11.040 --> 0:10:13.200 was a good thing to see that they kept that margin. 0:10:14.120 --> 0:10:15.880 Yeah, it was actually really good. In fact, when I 0:10:15.880 --> 0:10:18.080 look at the margin composition and I look at the 0:10:18.080 --> 0:10:22.440 North America operating profit margin, which is largely retail, that 0:10:22.559 --> 0:10:25.080 was slightly ahead of expectations at nine percent, so that 0:10:25.160 --> 0:10:29.199 was encouraging to see their international margins that were okay 0:10:29.240 --> 0:10:31.880 and AWS once again, that's really where you get the 0:10:31.920 --> 0:10:35.840 margin from. Thirty five percent was right in line with expectations. 0:10:36.000 --> 0:10:38.800 So I really think the quarter was in line to 0:10:38.920 --> 0:10:42.680 slightly better. From an operating fundamental standpoint. I think capecs 0:10:42.720 --> 0:10:46.000 obviously higher. We want to see where that investment is going, 0:10:46.360 --> 0:10:49.160 but hopefully they're making the investments and where they need 0:10:49.160 --> 0:10:51.640 to grow both the AWS and the retail business. 0:10:51.840 --> 0:10:53.960 All right, just to recap, we've got shairs of Amazon 0:10:54.000 --> 0:10:56.360 pairing their decline a little bit. The stock has been 0:10:56.360 --> 0:10:58.600 down as much as eleven percent post market right now 0:10:58.600 --> 0:11:01.840 down about seven and a half percent. Here again some 0:11:01.960 --> 0:11:05.439 of the headlines that we have highlighted on the Bloomberg. 0:11:05.520 --> 0:11:08.520 The company says twenty twenty six CAPECK about two hundred billion. 0:11:08.559 --> 0:11:10.400 The street estimate was one hundred and forty six point 0:11:10.440 --> 0:11:13.360 eleven billion. Sees first quarter net sales. We've talked about 0:11:13.400 --> 0:11:15.720 this range one hundred and seventy three point five billion, 0:11:15.760 --> 0:11:19.040 two hundred and seventy eight point five billion. Street estimate 0:11:19.240 --> 0:11:21.800 is one hundred and seventy five point fifty four billion. 0:11:22.040 --> 0:11:23.319 What else are you looking for? 0:11:23.400 --> 0:11:25.959 I mean, obviously more clarity in terms of what we'll 0:11:25.960 --> 0:11:28.160 get on the club call, but there's you know, we 0:11:28.160 --> 0:11:30.200 were talking to Spencer Soper early and he's like, there's 0:11:30.240 --> 0:11:32.960 just so much that comes out when you're dealing with Amazon. 0:11:33.400 --> 0:11:36.079 What other clarity are you looking for from this company 0:11:36.320 --> 0:11:37.360 or what are their aspects? 0:11:37.960 --> 0:11:40.520 Sure? I guess number one, we discussed the capex where 0:11:40.520 --> 0:11:43.440 it's going. Number two the backlog on AWS. I think 0:11:43.440 --> 0:11:45.480 that would be an interesting point to look at. And 0:11:45.520 --> 0:11:48.560 on the retail side, they're doing a lot, whether it's Rufus, 0:11:48.559 --> 0:11:51.440 whether it's Alexa plus. I'd love to hear how they're 0:11:51.480 --> 0:11:55.600 integrating AI into the workflow for consumers to just make 0:11:55.640 --> 0:11:58.480 that conversion much easier. And then what they're doing with 0:11:58.520 --> 0:12:02.200 open AI right, we don't know. There was news earlier 0:12:02.240 --> 0:12:06.240 about a ten billion dollar potential investment. What does that mean? 0:12:06.440 --> 0:12:08.600 Where is that going? What does it do for Amazon? 0:12:09.200 --> 0:12:11.960 What is the actual end result here from that investment? 0:12:12.160 --> 0:12:16.120 What about advertising? The company calling out advertising growing twenty 0:12:16.160 --> 0:12:19.920 two percent? Are we looking at that growth? Are we 0:12:19.960 --> 0:12:20.920 giving that enough credit? 0:12:22.160 --> 0:12:23.800 I don't know if we're giving it enough credit, But 0:12:23.880 --> 0:12:26.320 what I would say is it's still you know, twenty 0:12:26.360 --> 0:12:29.680 percent plus growth is admirable for Amazon. We think that 0:12:30.080 --> 0:12:33.280 advertising is a segment that sometimes overlooked as we get 0:12:33.400 --> 0:12:36.120 kind of caught up into AWS. I'd just say that 0:12:36.240 --> 0:12:39.240 for US, advertising is very important because it helps funnel 0:12:39.240 --> 0:12:41.720 the retail business. It's where you get the money to 0:12:41.760 --> 0:12:44.120 fund the retail business and the growth that you're having 0:12:44.160 --> 0:12:47.240 its pursue, especially when it comes to physical stores is 0:12:47.280 --> 0:12:51.440 groc free, its high profit margin, higher than the cloud business. 0:12:51.720 --> 0:12:54.160 So clearly a very important vehicle for them as they 0:12:54.200 --> 0:12:54.720 move forward. 0:12:54.840 --> 0:12:56.520 Where are the opportunities for advertising? 0:12:56.520 --> 0:12:57.040 I mean, I. 0:12:58.559 --> 0:13:02.079 Finally did it. I said, yes, three dollars a month 0:13:02.240 --> 0:13:05.280 because we want to watch The Night Manager without any ads. 0:13:06.200 --> 0:13:08.760 Those ads were really annoying me, and I did it. 0:13:09.200 --> 0:13:10.760 So I guess I'm part of the problem, or I 0:13:10.800 --> 0:13:13.320 guess for Amazon, part of the solution. But where's the growth? 0:13:13.880 --> 0:13:15.920 But there's just so much more, right if you think 0:13:15.920 --> 0:13:18.880 about the retail platform, there's a lot of advertisement done 0:13:19.040 --> 0:13:21.959 just on the e commerce aspect of the business. When 0:13:22.000 --> 0:13:24.720 you have Alexa plus, when you have Rufus, you know 0:13:24.760 --> 0:13:28.240 they're embedding advertisement in all sorts of ways. On the 0:13:28.280 --> 0:13:31.120 media side, yes, you're one of the few people that is, 0:13:31.440 --> 0:13:33.360 you know, opting out for those ads, but there are 0:13:33.400 --> 0:13:37.000 still millions of people who want it ad free. And therefore, 0:13:37.440 --> 0:13:40.480 you know, as they increase content, especially and now they're 0:13:40.520 --> 0:13:44.640 increasing content using AI to help facilitate even faster content, 0:13:44.840 --> 0:13:47.160 there's just so much opportunity for advertising. 0:13:47.240 --> 0:13:48.439 Still listen. 0:13:48.520 --> 0:13:50.319 I know this isn't your Baillywick, but I just think 0:13:50.360 --> 0:13:54.240 about Microsoft Alphabet, like all of these these hyperscalers, you know, 0:13:54.280 --> 0:13:56.360 when it comes to the cloud and the AI spend. 0:13:56.800 --> 0:13:58.840 Is there a takeaway for you on all of this 0:13:58.960 --> 0:14:01.200 as you kind of watch these numbers that have come 0:14:01.240 --> 0:14:02.280 out over the last week or so. 0:14:02.360 --> 0:14:03.920 And Alphabet, of course was just last night. 0:14:04.640 --> 0:14:07.439 Yeah. I think the big question that I'm hearing everyone 0:14:07.520 --> 0:14:10.320 ask is we continue to spend all this money, but 0:14:10.400 --> 0:14:13.040 what is the ROI on this capax? How do we 0:14:13.120 --> 0:14:16.440 kind of identify what the return is on the incremental 0:14:16.480 --> 0:14:19.160 investments that they're making, whether it's in chips, whether it's 0:14:19.200 --> 0:14:22.720 in other parts of the businesses. Help us like understand 0:14:22.800 --> 0:14:24.720 how to kind of gauge that impact. 0:14:25.440 --> 0:14:28.720 All right, great stuff as always covered it all, Punham, 0:14:28.720 --> 0:14:31.000 Thank you, thank you. We'll be looking for your research 0:14:31.040 --> 0:14:32.720 I know you're going to be working on it later on. 0:14:33.000 --> 0:14:35.560 It'll be on the Bloomberg Punham Goyle. She's senior analysts 0:14:35.560 --> 0:14:38.320 for e commerce and ath Leisure for Bloomberg Intelligence out 0:14:38.320 --> 0:14:40.400 there at BI headquarters in Princeton, New Jersey. 0:14:40.680 --> 0:14:43.280 We're not done. We're going to stay on Amazon because 0:14:43.320 --> 0:14:45.640 we continue to see this stock. It's off its lows. 0:14:45.760 --> 0:14:48.280 It was down as much as eleven percent here in 0:14:48.320 --> 0:14:51.000 the aftermarket. Now Tim just down about seven percent. 0:14:51.080 --> 0:14:53.080 I want to bring in James Chalkmock, partner and chief 0:14:53.120 --> 0:14:55.880 investment officer at Clockwise Capital. Have got about seventy million 0:14:55.920 --> 0:14:59.560 in assets under management. Also, they've got the Clockwise US 0:14:59.600 --> 0:15:02.560 Core equ ETF ticker is TIM and Amazon is the 0:15:02.560 --> 0:15:06.120 third biggest holding in the fund, more than five percent 0:15:06.520 --> 0:15:10.720 of the fund. James, with shares down seven and a 0:15:10.720 --> 0:15:12.440 half percent, are you buying more tomorrow? 0:15:14.800 --> 0:15:18.880 I don't think we'll be increasing our positions on increasing 0:15:18.920 --> 0:15:21.200 the size of any of our positions at this juncture. 0:15:21.240 --> 0:15:25.320 With the exception of the semiconductor space, you know, we 0:15:25.400 --> 0:15:28.160 see that the CAPEX numbers continue to come in ahead 0:15:28.160 --> 0:15:33.920 of expectations across all the hyperscalers, and we think you 0:15:34.040 --> 0:15:35.840 just have to follow the money in this market, and 0:15:36.200 --> 0:15:39.800 you know we're equal weight roughly with the index with 0:15:39.880 --> 0:15:43.320 respect to Amazon. See no urgency in the grossing of 0:15:43.400 --> 0:15:46.120 Amazon or any other of the megacap names. 0:15:46.200 --> 0:15:49.960 Are you concerned about the two hundred billion dollars that 0:15:50.000 --> 0:15:51.160 Amazon will spend this year? 0:15:53.280 --> 0:15:56.200 Obviously it's a concern for them and for everybody else. 0:15:57.400 --> 0:15:59.840 I mean, we're living in a world now, in a 0:16:00.080 --> 0:16:03.440 market now where you know, earnings, free cash flow, return 0:16:03.520 --> 0:16:06.160 on spend, all those things are important again. You know, 0:16:06.280 --> 0:16:09.480 just a couple of quarters ago you couldn't spend enough 0:16:09.880 --> 0:16:13.080 and be rewarded for it. And now you know there's 0:16:13.400 --> 0:16:16.560 the market's kind of getting religion again as it relates 0:16:16.600 --> 0:16:20.800 to you know, the financial performance and the financial expectations 0:16:20.840 --> 0:16:24.800 and projections for these companies. And you know it was 0:16:24.840 --> 0:16:28.720 bound to become relevant again at some point, and you 0:16:28.760 --> 0:16:32.080 know it really started last quarter with broad cop in 0:16:32.160 --> 0:16:34.320 the in the month of December, and now you're seeing 0:16:34.320 --> 0:16:37.280 it percolaid across all the companies reporting in January February. 0:16:37.320 --> 0:16:39.240 I want to ask you about what the details are 0:16:39.280 --> 0:16:42.160 that matter, And I'm looking at some other highlights from 0:16:42.200 --> 0:16:46.680 the press release from the last earnings they announced this is. 0:16:46.680 --> 0:16:49.359 Some of the highlights since the company's last earnings announcement 0:16:49.480 --> 0:16:53.560 include that Amazon announced new AWS agreements with Open Ai, Visa, 0:16:54.080 --> 0:16:59.880 the NBA, black Rock, Perplexity, Lift, United Airlines, Door, Dash, Salesforce, 0:17:00.120 --> 0:17:04.679 US air Force, Adobe, Thompson, Reuters, AT and T, S 0:17:04.720 --> 0:17:08.520 and P Global, National Bank of Canada, London Stock Exchange, Group, 0:17:08.600 --> 0:17:12.359 Choice Hotels, Accenture, Indeed, HSBC. 0:17:12.160 --> 0:17:13.560 CrowdStrike, and more. 0:17:14.000 --> 0:17:16.480 The reason I went through the list is because I 0:17:16.520 --> 0:17:19.480 feel like we have this question. Is it just about 0:17:19.520 --> 0:17:23.080 the hyperscaler spending and building out, but what we're increasingly 0:17:23.119 --> 0:17:27.400 seeing right is more businesses tap into this. 0:17:27.800 --> 0:17:30.480 Can we make the assumption at this point, James. 0:17:30.480 --> 0:17:34.040 That these are businesses that are going to continue to 0:17:34.160 --> 0:17:37.520 have to spend with an Amazon, or for that matter, 0:17:37.960 --> 0:17:38.840 with an alphabet. 0:17:40.640 --> 0:17:43.080 Absolutely, I think you have to make that assumption. I mean, 0:17:43.119 --> 0:17:46.159 the world is only going in one direction. Productivity is 0:17:46.200 --> 0:17:50.399 only going to get growth, and you need to leverage 0:17:50.440 --> 0:17:53.320 the infrastructure that these companies have built in order to 0:17:53.600 --> 0:17:58.960 achieve those goals and capitalize on those opportunities. That being said, 0:18:00.560 --> 0:18:05.240 you know, the money and the profits do matter, and 0:18:06.680 --> 0:18:10.760 we're going through a transition period right now. Where kind 0:18:10.800 --> 0:18:16.560 of growth assumptions are being revisited, valuations assumptions are being revisited. 0:18:16.680 --> 0:18:18.280 I mean, if you look at all the companies that 0:18:18.280 --> 0:18:20.239 are reported thus far, and a lot of them are 0:18:20.240 --> 0:18:23.240 traded down. I think Metap being kind of the main exception. 0:18:24.400 --> 0:18:26.960 Estimates have gone up for the most part. However, I 0:18:27.000 --> 0:18:29.520 mean Palenteers actually the poster re shop of this. Estimates 0:18:29.520 --> 0:18:33.639 came up materially. However, the stock has since fallen back 0:18:33.800 --> 0:18:36.080 a lot. And what that means is when estimates go 0:18:36.160 --> 0:18:40.000 up and the stock goes down, that means there's valuation compression. 0:18:40.560 --> 0:18:43.520 And you're seeing the market right now north of three 0:18:43.560 --> 0:18:47.840 time sales valuations are at or near all time highs, 0:18:48.280 --> 0:18:50.720 and you know they have to come in and that's 0:18:50.760 --> 0:18:53.840 why you got to stay nimble, you got to stay hedged. 0:18:53.960 --> 0:18:56.720 And I don't think any of these companies are going 0:18:56.800 --> 0:19:00.600 to be immune, with the exception of semiconductor companies, which 0:19:00.600 --> 0:19:03.119 are probably the only area of the market where you 0:19:03.160 --> 0:19:08.600 can likely see our performance relative to expectations by the 0:19:08.640 --> 0:19:14.200 biggest margin on on earnings versus other text companies and 0:19:14.240 --> 0:19:14.960 other sectors. 0:19:15.040 --> 0:19:18.600 So when you know when when Meta Platforms was he 0:19:18.640 --> 0:19:23.120 was Meta earlier this, No, it was Alphabet. I'm losing 0:19:23.200 --> 0:19:24.600 losing track here, James, Thank. 0:19:24.480 --> 0:19:25.639 You, Carol, C. 0:19:25.840 --> 0:19:28.040 Matt Miller not the only one who forgets what dat 0:19:28.080 --> 0:19:29.119 it is when Alphabet. 0:19:29.200 --> 0:19:32.320 You know, when when other companies report higher than expecting 0:19:32.400 --> 0:19:36.000 cap X like Alphabet yesterday, you know, you see at 0:19:36.080 --> 0:19:38.639 least the knee jerk reaction you could see like a 0:19:38.640 --> 0:19:42.760 Broadcom moving higher. For example, who's the beneficiary of this 0:19:42.800 --> 0:19:44.399 two hundred billion dollars? 0:19:46.200 --> 0:19:49.920 I mean, it's all the companies that you you'd consider, 0:19:50.040 --> 0:19:54.159 you know, within the AI ecosystem from Envideon down. But 0:19:54.280 --> 0:19:58.399 really what we're focused on in terms of our holdings 0:19:58.480 --> 0:20:02.680