Amazon Earnings Unpacked | Pivot

1. 0:00 – 0:30

   Q1 headline results: revenue up, profits tripled, AWS surges

   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.

2. 0:30 – 1:00

   Anthropic investment and advertising lift from Prime Video ads

   1. KSKara Swisher0:30

      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

3. 1:00 – 1:30

   Andy Jassy stepping out of Bezos’ shadow as operator-CEO

   1. KSKara Swisher1:00

      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

4. 1:30 – 1:42

   Regulatory overhang: marketplace scrutiny alongside AI optimism

   1. KSKara Swisher1:30

      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?

5. 1:42 – 2:12

   Scott’s thesis: Amazon is essentially a cloud company now

   1. 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

6. 2:12 – 2:42

   AI-enabled cloud moats: scale, capex, and the ‘rent vs build’ choice

   1. SGScott Galloway2:12

      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

7. 2:42 – 3:25

   Demand sensitivity risk: what if the AI scramble slows?

   1. SGScott Galloway2:42

      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.

   2. KSKara Swisher3:16

      Mm-hmm.

   3. 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-

   4. KSKara Swisher3:24

      Yeah.

   5. SGScott Galloway3:24

      ... I, I find it.

8. 3:25 – 3:47

   Who are the AI platform winners? Meta vs cloud titans

   1. 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.

   2. SGScott Galloway3:46

      Well, not only that but-

   3. KSKara Swisher3:47

      Right?

9. 3:47 – 4:06

   Growth envy and the capex reality: what it takes to ‘grow like them’

   1. 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."

10. 4:06 – 4:53

    ‘Bezos is not coming back’: Jassy’s earnings as validation (and some joking)

    1. KSKara Swisher4:06

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

    2. SGScott Galloway4:10

       Oh, yeah.

    3. KSKara Swisher4:10

       ... that Jeff is coming back. I-

    4. SGScott Galloway4:12

       No.

    5. KSKara Swisher4:12

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

    6. SGScott Galloway4:14

       No.

    7. KSKara Swisher4:14

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

    8. SGScott Galloway4:17

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

    9. KSKara Swisher4:18

       He's not... He had-

    10. SGScott Galloway4:18

        He's not coming back.

    11. KSKara Swisher4:19

        He's not coming back. (laughs)

    12. SGScott Galloway4:20

        He's not coming back.

    13. KSKara Swisher4:21

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

    14. SGScott Galloway4:23

        Look at those earnings. Give me a break.

    15. KSKara Swisher4:24

        I said he's-

    16. SGScott Galloway4:24

        Look at those fillers and that thong. Jesus Christ.

    17. 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-

    18. SGScott Galloway4:45

        Good.

    19. KSKara Swisher4:45

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

    20. NANarrator4:52

        (door shuts)

11. 4:53 – 5:05

    Subtext of the earnings call: Jassy’s ‘told you so’ moment

    1. SGScott Galloway4:53

       But in every earnings call-

    2. KSKara Swisher4:54

       Yeah.

    3. SGScott Galloway4:54

       ... the CEO, there's a subtext of what they're saying-

    4. KSKara Swisher4:57

       Mm-hmm.

    5. SGScott Galloway4:57

       ... but they're not saying. And in this-

    6. KSKara Swisher4:58

       Mm-hmm.

    7. SGScott Galloway4:58

       ... latest earnings call, Andy was saying-

    8. KSKara Swisher5:00

       AI.

    9. SGScott Galloway5:02

       "What do you think of me now, bitch?"

    10. KSKara Swisher5:05

        Right. That's what he said.

    11. SGScott Galloway5:05

        That's what he was saying.

12. 5:05 – 5:58

    What should Amazon do next? Stay the course on AI infrastructure

    1. KSKara Swisher5:05

       'Cause that's the kind of guy he is. (laughs) He's not like that at all. What should they be doing right now? They're doing the healthcare. They're doing-

    2. SGScott Galloway5:11

       I don't know.

    3. KSKara Swisher5:11

       ... this and that.

    4. SGScott Galloway5:12

       The exact same thing. I, I, I don't think-

    5. KSKara Swisher5:15

       Yeah.

    6. SGScott Galloway5:15

       I mean, uh, the... AI... Look, everyone, everyone is zeroing in on the same thing. All-

    7. KSKara Swisher5:19

       Mm-hmm.

    8. SGScott Galloway5:19

       All the biggest players have said-

    9. KSKara Swisher5:21

       Efficiencies.

    10. SGScott Galloway5:21

        ... the fastest growing expenditure in history across, uh, corporations and to a lesser extent the consumer is AI. They need inf- infrastructure and it's perfect for them. The infrastructure cost, costs so much money that there's only a few of us that can do it. We'll all have our different versions of mozzarila cheese- mozzarella cheese but we will be the only deli in town.

    11. KSKara Swisher5:41

        Mm-hmm.

    12. SGScott Galloway5:42

        Uh, so we're just gonna go hard at this and it'll increase our operating amount. I mean, they should do ab-

    13. KSKara Swisher5:47

        Yeah. Great.

    14. SGScott Galloway5:47

        You know what they should do? They should do absolutely nothing new.

    15. KSKara Swisher5:49

        Nothing new.

    16. SGScott Galloway5:49

        They should stay focused (laughs) on this.

    17. KSKara Swisher5:51

        All right. Well, congratulations, Andy Jassy.

Episode duration: 5:58