Amazon Earnings Unpacked | Pivot

1. KSKara Swisher0:00

   Amazon is out with its Q1 earnings. Revenue went up 13% to 143 billion and profits more than tripled to 10.4 billion, both exceeding Wall Street's expectations. AWS, Amazon Cloud's computing unit, had a particularly strong quarter with revenue up 17% and operating income rocketing 84% to 9.4 billion. Really strong numbers. Uh, obviously Amazon wants to be a big player in AI, cloud computing and other areas, and, uh, they have said AI (laughs) over 30 times on the earnings call. They said it. Uh, Amazon recently added another 2.5 billion to its Anthropic investment. That's their company they're backing like Microsoft's backing OpenAI. Uh, Anthropic's made up of people who left OpenAI essentially. Advertising sales were also up 24% fueled by, uh, that move to turn on ads for Prime Video. Um, so what, what do you think they're doing? I- I'm gonna start first actually. I think Andy Jassy is, is moving himself into the Satya Nadella/Tim Cook position here. I think it's very hard to run a company when you're not, um, the founder, es- and especially if the founder's still living. Um, and so you, you tend not to get out of the shadows. He has been there since a very young age, um, but he's starting to figure out how to run this place I think. Um, I like him a lot better than Jeff Bezos, I can tell you that, as a person. Um, but he's... He obviously ran the AWS unit and brought it to... really saved Amazon's butt creating that unit, and he was the one doing it. So I think he's sort of finding his way in, in an interesting way. He still faces enormous regulatory and, um, congressional investigations as, to the Marketplace, et cetera. But in general, I think people are liking what they're doing around AI and being very crisp. But I don't know. Your thoughts?

2. SGScott Galloway1:42

   If you wanna be the CEO of a company, typically what you... Typically, the CEO is usually the person running the, you know, the most profitable operating units. Andy ran the most profitable group with the big- the best future and that is AWS. And if you really look at Am- Amazon, I would argue, is now essentially a cloud company with a really strong retail platform that they sell media against. And the, the... It's not only... I mean, you wanna talk about chocolate and peanut butter, cloud plus AI. Most companies are training their LLMs on one of three cloud providers. These guys are the only ones that have the money to make the sort of requisite investments where you can basically rent your AI or train your own LLMs on their AI-compatible cloud services. So you not only have cloud but you have AI-enabled cloud with huge moats 'cause no one else can make these types of investments. Amazon, Google, and Microsoft have 67% share of global cloud services. Um, this is... I mean, this is a gift. These, these companies, uh, really th- this quarter was about cloud. Now the fear is that if AI... if every company doesn't start scrambling to try and build their own front-end AI applications or figure out how AI can work in their business, if there's any sort of check back these companies will feel that. But these companies themselves don't believe that at all. They continue to add unbeli- make unbelievable investments to offer incredible opportunity. It's like, do you have $100 million to build out your own AI infrastructure or do you wanna rent ours? "Well, that's an easy one," said 99.99% of organizations around the world.

3. KSKara Swisher3:16

   Mm-hmm.

4. SGScott Galloway3:16

   But this is now... These companies are essentially... Their growth is really all about AI-enabled cloud services. It's just... It really is interesting-

5. KSKara Swisher3:24

   Yeah.

6. SGScott Galloway3:24

   ... I, I find it.

7. KSKara Swisher3:25

   There's gonna be three companies. There's gonna be... You know, you, you called into mind what is the... how is Facebook gonna monetize this, and I would agree with you. How are they gonna monetize? I think they'll make their businesses more efficient, including advertising using AI and their... and the, that, that pa- that's how they're gonna do it well. Um, but it's, it's really Meta, uh, Microsoft, and Amazon to me are the- gonna be the big players here.

8. SGScott Galloway3:46

   Well, not only that but-

9. KSKara Swisher3:47

   Right?

10. SGScott Galloway3:47

    ... if you look at Amazon, Alphabet, Microsoft, and Meta and the face of growth that any S&P 500 company would kill for... I mean, they're growing like crazy and everyone's like, "God, how do we grow like those guys?" And they, they go back to the board and said, "Okay, if you want me to grow anything like these guys, I need you to approve new hires, new plant, new property and equipment."

11. KSKara Swisher4:06

    But Amazon, I think Andy Jassy is sort of coming onto his own. Everyone... There was always those rumors-

12. SGScott Galloway4:10

    Oh, yeah.

13. KSKara Swisher4:10

    ... that Jeff is coming back. I-

14. SGScott Galloway4:12

    No.

15. KSKara Swisher4:12

    Someone said that to me last night. I was like, "He's-"

16. SGScott Galloway4:14

    No.

17. KSKara Swisher4:14

    "... abso-fucking-out." I was like, did you look at these earnings and stuff like that?

18. SGScott Galloway4:17

    No, no, no. Did you look at that thong?

19. KSKara Swisher4:18

    He's not... He had-

20. SGScott Galloway4:18

    He's not coming back.

21. KSKara Swisher4:19

    He's not coming back. (laughs)

22. SGScott Galloway4:20

    He's not coming back.

23. KSKara Swisher4:21

    His thong. That's what I said. I said he is like-

24. SGScott Galloway4:23

    Look at those earnings. Give me a break.

25. KSKara Swisher4:24

    I said he's-

26. SGScott Galloway4:24

    Look at those fillers and that thong. Jesus Christ.

27. KSKara Swisher4:26

    Uh, no. But no, no, what I said is look at the earnings for... This guy has... He had a, he had a rough patch and now I think he's getting, uh, his arms around it. The, the, um, the, the Collywood stuff is the least of his issues. I mean, I think they definitely have ha- been rocky in that area, but you know, they're wor- they're working it with the, with the ads and the... You know, they're very systemic at-

28. SGScott Galloway4:45

    Good.

29. KSKara Swisher4:45

    ... systematic, excuse me, at, um, Amazon. And you know, they still face enormous regulatory challenges

30. NANarrator4:52

    (door shuts)

Episode duration: 5:58