Research archive for AMZN

Cloud services have been growing incredibly fast over the last decade or so. Now that all the big players have released their quarterly results, we can take a closer look at who is dominating the sector.

For over a decade, Amazon was the odd one out when it came to profit margins amongst the big tech giants. Online retail is a high volume, low-margin business and Amazon could not compete with the software leaders when it came to free cash flow generation. But that has started to change. Take a look at the image below, showing the massive surge in cash flow that is underway at Amazon.

E-commerce giant Amazon had quarterly results last week, and they were excellent. The share price rose by 7% on the day.

Amazon is bulking up the live sport offering on its streaming platform. Last year it paid $100 million for the right to broadcast a Black Friday NFL game - a first for any broadcaster. That happened on 24 November this year, and it received mixed reviews.

Amazon announced that from next year, they will sell cars on their site. Amazon won't be the actual seller of the cars, the local dealerships will have that honour. This is due to strict laws in many states created to protect car dealers.

It's easy to criticise Amazon's online retail business for its razor-thin margins. From revenues of $143 billion, Amazon "only" made profits of $10 billion in the latest quarter. Most of the group's profits came from other businesses like AWS, Amazon Prime and the advertising unit.

Last week, Amazon released market-beating numbers and its share price rose smartly, one of the only bright spots for the week. Amazon has suffered from a Covid hangover after expanding its distribution network too quickly during the global lockdown, when online orders surged. Thankfully, they are now through that adjustment, costs have normalised and the business has been right-sized.

Amazon Prime Video is introducing an ad-supported subscription tier in the US starting in early 2024. These subscribers will pay an additional $2.99 per month to continue enjoying content like The Marvelous Mrs. Maisel or The Boys without ads.

On Thursday, Amazon released results that beat estimates across every metric on which it is measured. That explains the solid share price reaction on Friday. There were concerns that AWS would plateau but a 12% year-over-year growth seemed to calm those nerves.

Amazon Prime Day was another big success. Members bought $12.7 billion worth of goods, 6.1% higher than last year. There was an interesting push to sell services this year, in addition to cheap electronic goods. Travel opportunities through booking.com, food delivery through Grubhub and telehealth through One Medical were all heavily promoted.

Amazon.com is reportedly in talks with wireless carriers, including Verizon Communications, T-Mobile, and Dish Network, to offer low-cost or potentially free mobile phone services to its Prime subscribers.

Of the large-cap tech stocks in Vestact's portfolio, Amazon has been the worst performer since the market highs at the end of 2021.

Amazon just announced the launch of Bedrock, a platform which will provide access to cutting-edge language models that compete with ChatGPT and Google's PALM. In plain English, Amazon is giving its customers the ability to create their own AI systems through their cloud hosting on AWS.

There's been a lot of hype around the split of Alibaba into 6 separate entities. Sadly it looks like this was a forced move to please Chinese regulators. Since its US listing in 2014, Alibaba has returned just 9%. The Amazon of China had so much potential, but Xi Jinping took a personal dislike to Alibaba chief Jack Ma.

There are rumours that Amazon is exploring a purchase of ailing cinema company AMC. Earlier in the week, the AMC share price was up 21% over two days in anticipation of an offer.