Barry SchwartzAmazon.com, Inc.AMZNTOP PICKJun 21, 2023

Absolute leader in what they do. Winning compared to WMT and COST. Consuming more cash than historically due to capex on data centres. Debt level dropping steadily, from 70% to 46%. Growing cashflow. Category killer. Doesn't own it, but he could.

He loves the growth in AWS.

Great earnings (21%) for a reasonable valuation (28x forward PE). PEG ratio is decent. Much more than online shopping -- e-commerce plus AWS, digital advertising, logistics, AI services, custom chips. AWS earnings have exceeded expectations, while AWS has grown 37%. Cloud business is a leader. 

Spending in AI is really paying off. Tangible results through faster cloud growth, wider AI deployment, and improving profitability and logistics in fulfillment centres. One of only 5 companies to have touched $3T in market cap. No dividend.

Is a big holding of his. The CEO assures stockholders that Amazon's large invest in AI will pay off. AWS could become a trillion-dollar business now that it's using AI; it's already Amazon's most-profitable business, far more than Prime. The CEO expects returns from AI will come faster than AWS. The CEO raised capex higher, but shares still rallied, up 4.58% today.

AWS is a real earnings engine, growth accelerated to nearly 40% (fastest pace in more than 4 years). Enormous AI spending finally translating into faster cloud growth, and translating into profits faster than the competition. Headline profit was inflated by a large paper gain on its investment in Anthropic.

AWS grew 37%, a touch below MSFT's Azure 43%, but still amazing numbers that will continue. Their data centres will pay off in only 3 years, also good.

They have a surging backlog, an attractive ROI and long-term growth potential. They lagged, and are catching up now.

AWS, retail and ads all accelerated in growth while profits hit a record high with operating margins of 13.7%. AWS contributes 61% of operating income and is accelerating rapidly. Has lots of momentum. Even if you cut the backlog in half, you still see outsize growth and market share gains. It gives her confidence in the AI space for Amazon.

It's dead money for spending a fortune on AI without seeing a return.

This, Microsoft, Google and Meta will be the distribution point of AI to wide adoption. AWS remains the dominant cloud player. OpenAI divorced from MSFT, so it could not be hosted on AWS. AWS is accelerating investments in data centres and chips, which is where the opportunity lies.

New lease on life in the last year. Natural beneficiary of AI and data centres. At these levels, the kind of name you just hold your nose and buy. Not extremely expensive.

She bought more based on the 27x forward PE vs. the 5-year average of 34x and 10-year average of 45x, and is trying on 11x EBITDA. Same-store sales on Prime Day were +9.3%, amazing.

They are designing their own AI chips, which was phenomenal news. Definitely a stock to watch.

He expects Amazon and Google to win the AI race. They have the money to build data centres and hire the best talent. He trims when the share price rises, and buys when the price declines. AMZN is one of the best companies in the world and is a long-term hold. Their retail and cloud (the leader) businesses are growing.

Its highest-margin businesses are the ones that are growing the most. Raising a lot of capital, putting pressure on the stock.