Dr J Rould
Full-Time Tech Investor, Quantum/Cybersecurity, Philosophy Background
Amazon's profits should explode once capex settles because it is replacing human labor with AI and robots while bringing in record revenue. Enterprises will get more output per dollar from electricity and compute than from salaries, so the value of human labor trends toward zero. Amazon laying off employees while raising capex and posting record revenue signals that shift, which makes owning the companies doing the replacing the way to stay ahead. x.com x.com x.com
Amazon is the first and currently only company deploying robots at truly massive scale, and robots should ultimately cost far less per unit of work than humans. It has about 1M active robots versus 1.6M human employees; at a 15.5% CAGR in deployment with flat headcount, robots could outnumber employees by 2029, a rough GPT-assisted projection. The operating-leverage trend is clear, though it is hard to say how much of it comes from robotics. x.com x.com x.com x.com
AWS's rapid growth in a huge business makes the long-term outlook decisively bullish for Amazon and the AI ecosystem. AWS revenue grew 39.3% year over year in September 2026; management guides for growth above 40% in 2027 and 2028. Amazon is always very conservative with guidance, making that AI outlook doubly bullish. x.com x.com x.com
AI embedded throughout software could bring huge future token spend to Amazon and Alphabet, whose AWS and GCP clouds host software builders and offer AI platforms. Ramp data show VC-backed firms spend 10 times more per employee on AI monthly than PE-owned and other firms, a possible leading indicator of software using more tokens relative to people. VC-driven demand is vulnerable to capital-cycle swings, but longer term incumbent software may become AI-native or be replaced. x.com
Amazon does not look like a huge AI winner based on its stock chart. Replacing American workers with H-1B hires who may not know how to maintain what was built is a further concern. x.com
Amazon's record AI spending looks backed by AWS demand, despite pressure on near-term profit. AWS grew 39% to $46bn, and CEO Andy Jassy projects growth above 40% in both 2027 and 2028. Quarterly capex reached $77.3bn, almost $20bn above expectations; the Q4 profit guide missed and retail ads softened. AWS acceleration makes the drop worth buying. Overweight; $370 target. x.com x.com
AI and robotics are about to improve Amazon's margins in a way the market is overlooking. x.com
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.com
Amazon's margins can expand materially as AWS compounds, advertising scales and robotics strips labor from fulfillment, a rerating the market misses while it punishes the spending. AWS revenue hit $128.7B last year with backlog up 40% to $244B, and Andy Jassy said AI could lift AWS to $600B a year by 2036. Amazon has 1 million robots deployed; Vulcan handles about 75% of items and Sequoia stores inventory up to 75% faster. Net margin was about 10.8% on 2025 revenue of $716.9B. x.com
Amazon has three ways to profit from AI. AWS sells computing power, its Anthropic and OpenAI investments add model exposure, and robotics can improve retail economics. The key question is how much of that becomes owner earnings, which a ten-year owner-earnings model with return scenarios sets out to answer. x.com x.com
Amazon is one of the market's great opportunity-cost traps. After its earnings and historic capex spending, the stock risks moving sideways for a long period, locking up capital that could earn much better returns elsewhere. x.com
AI's threat to incumbent tech makes SpaceX the preferred investment for the next decade. AI has begun taking business from Google, with Amazon and Apple next; Microsoft's 27% workforce reduction program signals desperation. x.com
