Amazon—Earnings & Outlook

August 4, 2023

Amazon reported earnings yesterday afternoon

Amazon is all about convenience and efficiency; convenience and efficiencies in shopping, computing, health, and home management. It is a convenience and efficiency caterpillar, continuously able to morph into better versions of itself and its latest earnings report shows that Amazon may be able sustain free cash flow and fuel further stock gains even though it trades at lofty multiples.

🧬GenerativeAI & large language model (LLM) excitement and expansion as well as AI’s integration with Amazon Web Services (AWS) are a huge part of the company’s positive story even though generative AI monetization is still in its early stages. Amazon definitely looks able to compete head-to-head with Microsoft in generative AI capabilities.

☁Cloud customers are consistently opting for AWS when initiating new workloads/instances due to its extensive product range:
✔AWS recently introduced several AI-focused product launches spanning multiple layers of the tech stack
✔Optimizations within the public cloud will persist
✔The easing of comparisons should contribute to AWS revenue growth re-acceleration.
Amazon has also been heavily investing in its in-house semiconductor (chip) designs, with a growing emphasis on high-performance machine learning processors that play a crucial role in powering LLMs and can give it an advantage in generative AI to compete with ChatGPT.

🛍Amazon’s retail side continues to benefit from solid margins as well as 1-day & same-day delivery; retail growth should improve off 2Q levels in 2H.

Amazon, Morro Bay — Background photography and graphics by

If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.

Jeff Bezos

Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Past performance is not indicative of future results. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-23-75