Jim LebenthalAmazon.com, Inc.AMZNSTRONG BUYJul 31, 2026

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.

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. 

His preference is MSFT, and he'd buy today. Valuation is ~20x PE -- very fair valuation for business with good outlook for earnings growth for next 3-5 years. A bit more value than AMZN right now. Business model supports a better compounding over the long run, and generates significantly more FCF. Late to the AI race, and that's the reason for the selloff.

No issues with AMZN. Very well run, targeting new markets. You can't own all the tech companies, so you have to pick your spots.

Looking at a longer-term chart, not a huge growth rate for a company of this size with its level of market share in cloud computing. Recent pop, but he's troubled by capex spending and its issuing debt. Have to ask what's the value proposition? 

If you own it, don't sell, but don't back up the truck either.

His favourites right now are AMZN, NVDA, and MSFT. They're all going higher.

On the capex spend, sometimes it's a leap of faith. You're relying on these companies having some of the smartest people in the world with the most disposable capital. And those people really believe it's not a bridge to nowhere.

Undoubtedly, some companies are overdoing it and there will be another side to the mountain. But we don't know when that will be.

A sound growth stock. Are starting to offer supply chain services to customers.