Amazon AWS Best Positioned Cloud? Hatem Dhiab’s AMZN Compute & Backlog Bull Case

over 12% right now as we speak. All right let's go deep on Amaz looking at Amazon in our tech spotlight. Joining us right now h MD AB managing partner Gerber Kawasaki Wealth and Investment Management. Let's talk about Amazon what ly b Services segment, of Amazon. Hi Nicole, how are you? It's great. Yeah. Tell us a little bit about Amazon. Oh yeah. I mean, AWS is really a fant business. I think next year is a 25 year anniversary of AWS. Started basically as a merchant business services. And now it's, it's a business that's going to do probably $200 billion in revenue. They had five consecutive quarters of growing or accelerating growth, a at the margins just fantastic. A So it's really it's really one of the jewel in all of Amazon's because they it' it's a core competency for them building data centers and being able provide digital services. And plus are one of the biggest providers of c to anthropic, which obviously is one of the biggest companies in theI revolution. So there's so many good ts. They have their own silicon, so their own chips, Trainium, which is the main training chips for anthropic. They, they have accelerating revenue. So for me, it's, it's really a fantastic business and really a mispriced. I think going forward,hen we think about the landscape here, you talked about, obviously the compute that it provides to anthropic and the growth that it has seen quarter over qu And we think about the bull market that really started about four yearsgo and has taken off since then based on AI and the CapEx spend. Can this continue for Amazon? Is it well and best positioned to handle the compute AI revolution? Are they in the right place? Yeah.l, first of all, if this can continue, I'd say absolut Because every sort of compute they bring online i already spoken for. They already have 5 billion, $500 bi of presold compute over the nexto I think it will continue. But second of all, if you think that inference is going to keep growing as i gently comes on as robotics comes on, as we all really kind of put AI in everything that we do, Amazon will continue to be that flywheel that'g to be able to provide the chips, the training, the inference, and then also capacity, right? Because capacity is not growing at, you know, 1 or 2 times, a tho times. So I think that's why people have to really seezon as really continue to be at the core of, t involves AI growth. You talked about some of the comps that you were doing with the likes of Alphabet's cloud backlog that grew $50 billion then you talked about Amazon's backlog which grew faster. Tell me about that. Why Amazon growing faster. Maybe some of the numbers. Yeah. Well it's a bigger base right. I think alphabet grew about 65 or 70% on auch m smaller base. So alphabet grew about $50 billion. w their backlog from 370 to $500 billion. So $130 billion in contracts signed for the next two years. They are justply the biggest player in the space. And they are the biggest players because are being added for 25 years now. Again, going back to to sai earlier, is really their core competency. When you think about building physical data centers, alphabet is kind of newer to thi What Amazon has been doing this for a long time. So know how to get the the permitting, they know how to get the infrastructure built correctly. And they know really how to wire all the digital instruments to able to, to, to do this in the right way. So, so, so that's why I think theyas why a lot of companies, including Apple, them for their for their AWS or their cloud services. Really the margins too prett good, aren't they? When you think about Amazon Web Services, at least p I see one stat of 39.4%. The margins look pretty good and that AWS is in fact the pro engine here. Is that right? Absolutely. I mean, retail retail, which is obviously a bigger business than AWS, hasery, very low margins. But but the digital services, you know, once yout ce any more customer acquisition cost So for, for Amazon, it's really been able to maintain that customer grow the services they sell to them. And then ouslh infrastructure, you know, there is a depreciation of five years e 10 to 15 years on the actual physical infrastructure. So, so absolutely much, much better busimuch better margins. And that's why the profits from AWS, I think they're almost 60% of Amazon profits on a much lowe base for total revenues for Amazon. I know you don't give price targets, but the stock right now is at 261. ki upside do you think that maybe we could see in percentage termsr over certain years. What are you watching for for a trend for stock. Yeah. I mean as we talked about this several, e vere AI build out. And Amazon again had five consecutive quarters of of accelerating growth. And it's only up 13% this year. So for me, if you're thinking about who is going to be benefiting most is Amazon. trading at, you know, 2122 PE. So, you kno veryh around market pricing. So I don't think the market is giving them t that they should have because rc capabilities. And also second thing that I think a lot of market participants are not looking at is this retail we have, this hasn't started yet. It's very nascent, very new. But Amazon, I think will benefit tremendously from this agents basically starting to, to buy t to do commerce on our behalf because they have the infrastructure, they have the trust. And really they have o work to, through the, t the agent system to, to, to route commerce to, to, to their sites and their really sellers. So I think that'somethingalso te a bit going forward. So Agentic AI, an agent helping me to buy whatever on amazon.com. For example, when we think about the retail business and you know, you talk about moats, right? And Amazon Web Services seems to be in a very special position. Does the retail bu also have a very special position? We've also had the Prime happening. Yeah. I personally don't have too many retail apps on my on app because it's so easy for me to go and find anything that I buy. And it also feels like every day I get a package from Amazon. So I think the reality is, yes, that moat is is also what happened is they have the infrastruto deliver. They have the lowest prices, they have the best tions. And yeah, we could argue that the ded a lot of the physical retail. But the reality when it comes to agents no they're going to find the best deals, the fastest delivery times really and the best access. And Amazon will And I can guarantee you they're working very, very hard to win in that space as well. And it will continue that huge CapEx spend. It's guided to roughly 220 billion. So we'll continue to watch this name, as you said, with the trends likely to continue wit the AI revolution that you think you're very bullish on in the big picture how to empty out. Always great to see you. Thank