Jo Bhakdi
Investor, Tesla & AI Stocks
Amazon, along with Nvidia and Tesla, is on a crazy sale given its growth, P/E and future. Investors seem to be selling guaranteed winners like Nvidia and Amazon simply because there are too many opportunities in smaller AI stocks and IPOs, which may amount to a kind of liquidity crunch. x.com x.comÂ
Diversified cash flows in the billions make the AI-buildout basket more appealing than standalone model companies. Many members look reasonably priced and have longer records of delivering returns; Anthropic and OpenAI look much more like gambles at current valuations, though either could appeal at the right price. A possible equal-weight portfolio to revisit in five years includes Amazon, Alphabet, Microsoft, Meta, Oracle and SpaceX. x.com x.comÂ
Alphabet's core Search growth is slowing while AI spending surges, making the selloff look deserved despite fast Cloud growth. Search growth fell from 19% to 17% to 12% over three quarters; Search now represents just under half of revenue. The stock could fall to $250, though Amazon is the preferred buy. x.com x.com x.com x.com x.comÂ
Amazon, Alphabet, Microsoft and Meta are not getting cheap; their multiples are sliding because separate monopolies are turning into one competitive market. They now spend enormous sums to sell the same AI to the same customers, funded largely by cyclical ads, on unproven returns. Microsoft faces AI eating per-seat licensing, Amazon fights in both retail and cloud, Alphabet's search premium is gone, and Meta keeps going all in for less. Markets can't price not knowing what a business will be. … Show more
Fast peer-cloud growth makes a bullish Amazon earnings view hard to resist. Azure grew 48% and Google Cloud 103%; the forecast is for 42%+ AWS growth. AWS is expected to grow over 40% annually over the next two years, so selling Amazon here risks missing that growth. x.com x.comÂ
Amazon looks attractive because AWS is growing 36% year over year while being less exposed to OpenAI and Anthropic than peers. That combination offers strong growth with less single-lab risk, yet Amazon trades near its lowest valuation ever. x.comÂ
Hyperscalers' incremental return on capital is cratering, so hard spending decisions are coming. In the June quarter, Amazon, Microsoft and Alphabet grew LTM EBIT 20% but needed 38% more deployed capital, before token prices cratered and with much demand from non-self-sustaining OpenAI. Compute and models may become a utility-like commodity. Insiders are selling, with Jeff Bezos filing to sell $4B of Amazon stock, and Google's $25B bond deal widened hyperscaler credit spreads. x.com x.comÂ
Hyperscalers' forward P/E has contracted 20% even as estimates ramped, making it rare to see things get much worse. Rising GPU rents and new lows in availability make the AI fears a fade; hyperscalers should lead. The next two weeks will be gut-wrenching amid the OpenAI raise, Anthropic S-1, Fed, midterms and mutual-fund selling into year-end, but that is the time to buy. x.comÂ
Amazon's bear narratives, from oil and its exposure to a possibly peak-timed Anthropic IPO to consumer slowdown and Bezos selling, miss that AWS growth has accelerated. AWS was growing 17% a year ago with the stock at $230; it now grows over 40%, yet the stock is only $258. The stock has already given back half its earnings pop. x.com x.comÂ
Amazon is uninvestable despite looking very cheap on above-consensus estimates, because everyone else's numbers are also above the Street, leaving no incremental buyers. x.comÂ
Amazon has an incredible growth runway, and Andy Jassy's latest shareholder letter leaves no doubt that it is the leader in AI. x.comÂ
