Instant Reaction: Amazon Reports Strong Cloud Unit Sales on Rising AI Demand

Bloomberg Audio Studios, podcasts, radio news. 0:00:08.200 --> 0:00:10.560 Shares an Amazon kind of bouncing around right now, but 0:00:10.840 --> 0:00:13.880 rallying in the after hours four point eight percent, gaining 0:00:13.920 --> 0:00:16.279 as much as six percent earlier. This after our first 0:00:16.360 --> 0:00:21.080 quarter earnings per share beat estimates. We did see that 0:00:21.280 --> 0:00:23.360 results came in way ahead of estimates, including the key 0:00:23.440 --> 0:00:26.880 AWS segment, extending the company's recent streak of beating estimates. 0:00:26.880 --> 0:00:29.720 Second quarter sales and operating income guidance did though come 0:00:29.720 --> 0:00:30.600 in a touch soft. 0:00:30.680 --> 0:00:32.120 All right, So let's get to it with us as 0:00:32.159 --> 0:00:36.640 Bloomberg Intelligence senior Alys Putnamgoyle and Anna Ragrana on Amazon 0:00:36.760 --> 0:00:39.000 and their outlook again, the stock up about four point 0:00:39.320 --> 0:00:42.680 six percent. Gosh, not sure where to start here because 0:00:42.680 --> 0:00:45.479 there's so many moving parts, honourg let me start with 0:00:45.520 --> 0:00:48.760 you in terms of we always think about AWS, but 0:00:48.880 --> 0:00:51.440 tell us about from your perspective, what you what jumps 0:00:51.440 --> 0:00:52.479 out for you for Amazon? 0:00:53.760 --> 0:00:56.120 Yeah, I would say AWS, Madgins. I mean, I just 0:00:56.160 --> 0:00:59.440 can't believe how big this number is. Thirty seven point 0:00:59.480 --> 0:01:03.400 six percent operating margins compared to last years twenty four percent, 0:01:03.720 --> 0:01:07.520 So that's almost you know, fourteen percent increes and that 0:01:07.520 --> 0:01:11.399 that is this phenomenal and basically shows the scalability of 0:01:11.400 --> 0:01:14.319 this business model. And you know, frankly speaking, we weren't 0:01:14.360 --> 0:01:17.400 expecting these kinds of margins for several years out. So 0:01:17.480 --> 0:01:20.800 I think this is this should be really good signed 0:01:20.840 --> 0:01:24.040 for investors that this is really a good business model, 0:01:24.080 --> 0:01:24.520 an rock. 0:01:24.520 --> 0:01:29.280 How do they do this? Given that Microsoft is catching up, 0:01:29.360 --> 0:01:33.520 given that Google's alphabet's Google is catching up? How did 0:01:33.560 --> 0:01:35.920 Amazon pull this off? How did they pull off these margins? 0:01:37.040 --> 0:01:39.679 I think they did a lot of cost rationalization over 0:01:39.720 --> 0:01:41.760 the last few years. They remember all the you know, 0:01:41.840 --> 0:01:44.080 layoffs and things that we heard about, So I think 0:01:44.160 --> 0:01:46.240 that has to do with it. Now, I mean, to 0:01:46.280 --> 0:01:48.760 be very honest, I think this is going to be 0:01:48.800 --> 0:01:51.560 a time that these margins will over time go a 0:01:51.600 --> 0:01:54.480 little bit down because of new investments in generative AI 0:01:54.960 --> 0:01:57.200 and you know, things that they have to do to 0:01:57.600 --> 0:02:01.120 expand the capacity of their data centers. So at the 0:02:01.160 --> 0:02:03.720 same time, I mean, you've never seen thirty seven point 0:02:03.760 --> 0:02:06.040 six percent margins for AWS before, all. 0:02:06.080 --> 0:02:08.440 Right, so forgive me punam, come on in, because yeah, 0:02:08.480 --> 0:02:10.960 I mean the retail side of the business is really 0:02:11.080 --> 0:02:13.560 super important too, So talk to us about what we 0:02:13.600 --> 0:02:14.560 saw on that side. 0:02:15.720 --> 0:02:18.480 Sure, the retail numbers were actually just in line, so 0:02:18.560 --> 0:02:23.000 they met expectations and they looked at that and advertising. 0:02:23.040 --> 0:02:25.639 I think the story really is on AWS. That's where 0:02:25.680 --> 0:02:27.960 the beat came from. But I would say, you know, 0:02:28.000 --> 0:02:31.320 the guidance is light of expectations, and that may have 0:02:31.440 --> 0:02:34.160 something to do with online because if you recall the 0:02:34.200 --> 0:02:37.080 first quarter, it did have an earlier easter. So some 0:02:37.200 --> 0:02:39.200 of the numbers that you see on the online side 0:02:39.280 --> 0:02:42.200 being strong and inline is thanks to that earlier easter 0:02:42.600 --> 0:02:44.920 and the spring sale that they had, which wasn't there 0:02:45.040 --> 0:02:47.360 last year. So some of the weakness that we're seeing 0:02:47.360 --> 0:02:50.359 in the guidance maybe due to the online business that 0:02:50.440 --> 0:02:52.480 we'll find out when they start talking on the call. 0:02:52.600 --> 0:02:56.760 Put what about advertising here? This is something that not 0:02:56.840 --> 0:02:59.800 just on the Prime video which is relatively new, but 0:02:59.800 --> 0:03:03.000 the business over the last few years has grown massively, 0:03:03.960 --> 0:03:05.760 and when it comes to the search function, talk to 0:03:05.840 --> 0:03:07.600 us about what you saw with advertising this quarter. 0:03:08.440 --> 0:03:12.359 Advertising was strong, once again relatively inline with expectations to 0:03:12.480 --> 0:03:15.000 a little better. So we think that business continues to 0:03:15.040 --> 0:03:17.320 grow at a twenty plus percent clip, and we think 0:03:17.360 --> 0:03:19.799 that will continue, especially with the layering on of the 0:03:20.200 --> 0:03:22.880 Prime video advertising business. What I'd say there is. You know, 0:03:22.919 --> 0:03:24.880 when you think about the two big businesses that it 0:03:24.919 --> 0:03:28.639 has outside of retail, they're very, very high margin businesses, 0:03:28.639 --> 0:03:31.919 both advertising and AWS. So when we see the cash 0:03:31.960 --> 0:03:34.640 flow generation that we saw in the quarter, it's really 0:03:34.680 --> 0:03:36.800 thanks to these two businesses growing at the rate that 0:03:36.800 --> 0:03:37.360 they're growing. 0:03:37.440 --> 0:03:39.080 Anna Rock, I want to bring you back in because 0:03:39.120 --> 0:03:40.480 you know, one of the previews that we had on 0:03:40.520 --> 0:03:43.000 the Bloomberg today is, you know, Amazon earnings to bring 0:03:43.000 --> 0:03:46.480 more scrutiny for AI tethered stocks and just saying how 0:03:46.600 --> 0:03:49.400 kind of the bar was high coming off of Alphabet 0:03:49.520 --> 0:03:53.440 and Microsoft last week right where they showed, hey, listen, 0:03:53.520 --> 0:03:55.800 all this money that we're spending on AI, it's paying 0:03:55.840 --> 0:03:58.760 off for us. We're trying to kind of find where 0:03:58.800 --> 0:04:01.760 the AI story and what it's doing for Amazon. What 0:04:01.760 --> 0:04:02.600 can you tell us there? 0:04:03.720 --> 0:04:05.280 Yeah, and if you look at it, they launched a 0:04:05.280 --> 0:04:07.800 brand new product today called Amazon Q. You're going to 0:04:07.840 --> 0:04:10.720 see a lot of new enterprise products being launched by 0:04:10.760 --> 0:04:13.560 AWS because you know, one of what there are one 0:04:13.600 --> 0:04:16.040 ways to look at it is on the consumer chat 0:04:16.080 --> 0:04:18.520 GPT kind of stuff. They're not the player over there. 0:04:18.760 --> 0:04:23.360 They are more selling AI to corporations or large companies. Now, 0:04:23.400 --> 0:04:25.320 that's going to take time to build up, which is 0:04:25.360 --> 0:04:27.920 one of the reasons I'm saying that this high margin 0:04:27.960 --> 0:04:30.600 of thirty seven percent thirty seven point six percent on 0:04:30.640 --> 0:04:33.400 Amazon Web Services is not going to last forever. It's 0:04:33.400 --> 0:04:36.520 going to go down slowly over the next few years. Now, 0:04:36.600 --> 0:04:39.520 that's not a bad thing because in a scalable model 0:04:39.600 --> 0:04:42.080 like this to you know, be able to give some 0:04:42.200 --> 0:04:44.479 of that back to gain revenue. I think it's it's 0:04:44.600 --> 0:04:47.200 a long term really positive sign for AWS. 0:04:47.360 --> 0:04:51.200 Honor rog one hundred billion dollar annual revenue run rate 0:04:51.440 --> 0:04:56.320 for AWS. That number a surprise. 0:04:57.160 --> 0:04:59.120 Oh no, I mean we have, we have, we wrote 0:04:59.120 --> 0:05:01.200 a big report and we don't see a reason why 0:05:01.279 --> 0:05:03.520 this won't be two hundred billion one day. The question 0:05:03.560 --> 0:05:05.919 only is how long it's going to take. That's the 0:05:05.960 --> 0:05:08.159 big question, is whether it's going to take five years 0:05:08.240 --> 0:05:10.560 to get there or six years, seven years. But the 0:05:10.720 --> 0:05:13.359 end markets are so large, you know, we remain confident 0:05:13.440 --> 0:05:15.440 that it's going to hit two hundred billion over the 0:05:15.480 --> 0:05:18.680 next you know, somewhere between six to seven years. 0:05:19.080 --> 0:05:20.640 Poonam, what are they going to do? Like, what are 0:05:20.640 --> 0:05:22.800 the numbers we were just talking about with our TV colleagues. 0:05:22.839 --> 0:05:26.680 Operating cash flow increased eighty two percent to ninety nine 0:05:26.800 --> 0:05:29.159 point one billion for the trailing twelve months compared with 0:05:29.480 --> 0:05:32.440 fifty four point three billion for the trailing twelve months 0:05:32.480 --> 0:05:35.440 that ended in March thirty first, twenty twenty three. They 0:05:35.440 --> 0:05:38.080 got a lot of money coming in. Like you know, 0:05:38.120 --> 0:05:40.600 there was some speculation, do they do a dividend, do 0:05:40.600 --> 0:05:43.120 they do buy back? Like what do you want to 0:05:43.160 --> 0:05:44.920 be seeing that they do with their cash. Certainly on 0:05:44.960 --> 0:05:46.320 the retail side of things. 0:05:46.279 --> 0:05:48.520 I think while ad mesters would like a dividend and 0:05:48.600 --> 0:05:50.479 buy back, I think they're going to invest back in 0:05:50.520 --> 0:05:52.720 the business. So Tiana Rox points, you know, I think 0:05:52.720 --> 0:05:55.520 we are going to see capex right on the AWS side, especially, 0:05:55.600 --> 0:05:57.719 and they've said that they've said that in the past 0:05:57.760 --> 0:06:00.120 that they do plan to take Capex up there. So 0:06:00.160 --> 0:06:02.760 we do see them spending more there. But that cash 0:06:02.800 --> 0:06:04.960 full generation is only going to go higher. You know, 0:06:05.160 --> 0:06:08.200 these margins that they're generating on the advertising business and 0:06:08.240 --> 0:06:11.919 the AWS business, and as those businesses scale even further, 0:06:12.279 --> 0:06:15.040 are going straight to the bottom line and offsetting any 0:06:15.080 --> 0:06:17.680 losses that they have. If that in the retail business, 0:06:17.760 --> 0:06:18.640 you know, you said. 0:06:18.440 --> 0:06:22.200 To Punham that overall guidance for the company, and that 0:06:22.240 --> 0:06:24.799 seems to be the thing that was certainly we highlighted 0:06:24.839 --> 0:06:27.760 on the Bloomberg In terms of their revenue guide and 0:06:27.800 --> 0:06:29.640 second quarter net sales, they see one hundred and forty 0:06:29.640 --> 0:06:31.760 four billion tw one hundred and forty nine billion. The 0:06:31.760 --> 0:06:34.560 street estimate is above that range at one hundred and 0:06:34.600 --> 0:06:37.159 fifty point twenty one. You said, you know, might be 0:06:37.160 --> 0:06:40.680 because of the online business. What's the question you want 0:06:40.680 --> 0:06:43.680 to be hearing? Are that analysts are asking specifically on 0:06:43.720 --> 0:06:44.120 that call. 0:06:45.440 --> 0:06:47.200 I think the first question is how much did in 0:06:47.240 --> 0:06:49.520 earlier easter help them in the spring sale? How much 0:06:49.560 --> 0:06:51.920 did that contribute to that seven percent increase that they 0:06:51.960 --> 0:06:54.880 saw in online sales first party, because if that was 0:06:54.920 --> 0:06:57.000 a few percentage points, and that kind of answers the 0:06:57.080 --> 0:06:59.680 question going into the second quarter. And then the other 0:06:59.800 --> 0:07:02.320 question I'd ask on the retail side is you know, 0:07:02.480 --> 0:07:05.240 how are they doing in terms of just gaining share 0:07:05.279 --> 0:07:09.080 online against these rising threats from TIMU and She and 0:07:09.120 --> 0:07:11.480 I don't know if they'll ever answer that, but clearly 0:07:11.520 --> 0:07:14.440 those things are growing very rapidly, and is there something 0:07:14.440 --> 0:07:17.080 else that they're doing to offset those competitive threats? 0:07:17.800 --> 0:07:20.320 Honor rog I'm just taking some time to look through 0:07:20.400 --> 0:07:23.840 the cloud results here. And one thing that was notable 0:07:23.880 --> 0:07:27.760 going into this report is that there was some discussion 0:07:27.760 --> 0:07:31.360 about sales growth at AWS slowing to a record low 0:07:31.440 --> 0:07:34.480 last year, businesses cutting back on tech spending. They wanted 0:07:34.520 --> 0:07:37.120 to bring those computing bills that balloon during the pandemic 0:07:37.200 --> 0:07:41.200 under control. Now you have Jasse out in a statement 0:07:41.600 --> 0:07:45.040 saying essentially that the combination of companies renewing their infrastructure 0:07:45.040 --> 0:07:48.360 modernization efforts and the appeal of aws's AI capabilities is 0:07:48.360 --> 0:07:52.960 reaccelerating aws's growth rate. Is that him saying companies are 0:07:53.000 --> 0:07:56.360 done cutting back on their cloud spend. Is that him 0:07:56.400 --> 0:07:59.320 saying the worst is behind us when it comes to 0:07:59.680 --> 0:08:00.760 company tiping their bell. 0:08:02.120 --> 0:08:04.440 Yeah, And frankly speaking, he had to say that because 0:08:04.680 --> 0:08:07.600 both Microsoft and Google came up with very good numbers. Now, 0:08:07.600 --> 0:08:10.840 when you look at AWS commitments, you know, they gave 0:08:10.880 --> 0:08:13.840 out a figure called cloud commitments, which is people signing 0:08:13.880 --> 0:08:16.920 long term contracts even in the last you know, I 0:08:16.960 --> 0:08:18.760 would say one and a half to two years. Those 0:08:18.840 --> 0:08:22.520 numbers have been very strong, twenty percent, thirty percent even higher, 0:08:22.840 --> 0:08:25.800 which means people are making those commitments they're not just 0:08:25.960 --> 0:08:28.680 using them, They're not using those cloud credits. They're just 0:08:28.760 --> 0:08:32.199 pacing themselves into a variable cost model, and then when 0:08:32.280 --> 0:08:35.640 economic conditions improve for their clients, they will, you know, 0:08:35.679 --> 0:08:38.160 get the consumption up. And that's what we're seeing right now. 0:08:38.480 --> 0:08:40.600 Anareg, what's your number one question for the call? 0:08:42.240 --> 0:08:44.760 The number one question is can you break out your 0:08:45.880 --> 0:08:49.960 AI workloads versus the non AI workloads on AWS? Because 0:08:50.000 --> 0:08:53.600 Microsoft's already saying so, if Microsoft sales growth has let's say, 0:08:53.720 --> 0:08:56.920 you know, thirty percent, seven percentage points of that is 0:08:56.920 --> 0:08:59.400 because of AI, I want to know that exact number 0:08:59.400 --> 0:09:01.600 for aw US. I don't think they're going to give 0:09:01.600 --> 0:09:04.480 it this time, but that that's my number one question. 0:09:05.080 --> 0:09:08.280 Hey, we forgive us, but we got earnings crossing again 0:09:08.400 --> 0:09:11.280 right now. Shares AMD down about four point two percent 0:09:11.679 --> 0:09:15.000 in the after hours. Second quarter revenue coming in at 0:09:15.040 --> 0:09:17.360 five point four to six billion dollars estimates were for 0:09:17.400 --> 0:09:21.119 the midpoint there five point seven first quarter just atdps, 0:09:21.240 --> 0:09:25.880 did beat estimates. Should note also operating margin coming in 0:09:26.000 --> 0:09:28.800 above estimates at twenty one percent versus estimates of twenty 0:09:29.160 --> 0:09:34.000 point eight percent. First quarter capex, though coming in way 0:09:34.040 --> 0:09:36.760 above estimates one hundred and forty two million dollars. Carrol 0:09:36.840 --> 0:09:39.200 estimates were for one hundred and eighteen point four million dollars. 0:09:39.240 --> 0:09:41.280 Amd On now down more than five percent. In the 0:09:41.280 --> 0:09:44.040 after market, Amazon, we continue to talk about it. Their 0:09:44.080 --> 0:09:46.319 cloud unit posting the strongest sales growth in a year, 0:09:46.360 --> 0:09:49.319 a sign that the retailer's most profitable unit is recovering 0:09:49.320 --> 0:09:53.640 from a slump as businesses resume spending on technology projects. 0:09:53.679 --> 0:09:56.679 And we've seen the shares certainly rally here in the 0:09:56.720 --> 0:09:59.960 after market. We're talking with Pudam Goyle and Honor Agrana 0:10:00.160 --> 0:10:03.560 of our intelligence Bloomberg Intelligence team put them, is there 0:10:03.600 --> 0:10:05.640 anything in here too that you get an idea of 0:10:05.720 --> 0:10:08.439 kind of how consumers are doing? Certainly, Amazon is such 0:10:08.480 --> 0:10:11.679 a great key metric when it comes to this what 0:10:11.720 --> 0:10:13.559 are you seeing in that front? 0:10:14.520 --> 0:10:16.760 I think Amazon continues to take share. So when you 0:10:16.800 --> 0:10:20.160 look at the consumer dynamics today in retail, Amazon has 0:10:20.200 --> 0:10:23.920 been taking share. Most of the consumer is still cautious, 0:10:24.320 --> 0:10:27.720 they're still training down to value, they are spending where 0:10:27.720 --> 0:10:30.600 they want to spend, and they're spending more on staples 0:10:30.600 --> 0:10:33.000 than they are on discretionary. So I think the numbers 0:10:33.000 --> 0:10:36.080 that they've posted today show that they continue to take share, and. 0:10:36.080 --> 0:10:37.800 I just want to point in Amazon shaares now are 0:10:37.880 --> 0:10:40.760 only up about one percent here, so they've definitely pared 0:10:40.800 --> 0:10:42.760 back some of their earlier moves. 0:10:42.840 --> 0:10:45.240 Put them on a report like this. I see the 0:10:45.240 --> 0:10:47.640 way that Amazon is dominating when it comes to cloud, 0:10:47.679 --> 0:10:51.000 when it comes to advertising, when it comes to online retail, 0:10:51.200 --> 0:10:54.360 They're in healthcare now, They're getting everywhere. And I guess 0:10:54.400 --> 0:10:57.600 my question for you is about regulatory risk here. FTC 0:10:57.720 --> 0:11:01.199 has a suit filed against the company, and I'm wondering 0:11:01.200 --> 0:11:04.360 how investors should think about regulatory risk here. I mean, 0:11:04.400 --> 0:11:07.520 this is a close to two trillion dollar company. 0:11:08.280 --> 0:11:11.520 Well, we have analysts that cover it on the regulatory side, 0:11:11.559 --> 0:11:14.760 and I think so far the bi opinion is that 0:11:15.120 --> 0:11:18.720 we don't see a big risk to the Amazon business 0:11:18.800 --> 0:11:21.480 as it stands today, though we also don't see a 0:11:21.520 --> 0:11:25.200 breakup happening. We put very low probability on that. You know, 0:11:25.200 --> 0:11:27.840 when you think about the different businesses that Amazon competes, 0:11:27.880 --> 0:11:30.880 and it is a dominant share in many of them, 0:11:31.080 --> 0:11:33.280 but it's also a very small share in many of them, 0:11:33.320 --> 0:11:35.640 like the few that you mentioned healthcare. You know, Amazon's 0:11:35.679 --> 0:11:38.400 still a very small player in the healthcare business. In 0:11:38.440 --> 0:11:41.280 the grocery business where they're trying to make in roads, 0:11:41.480 --> 0:11:44.760 they're very small there. They are a large retailer, but 0:11:44.960 --> 0:11:47.920 most of their retail business is third party operated more 0:11:47.920 --> 0:11:51.040 than sixty percent. So there's arguments to be made on 0:11:51.080 --> 0:11:54.880 both sides, but our opinion at BI is that it's 0:11:54.920 --> 0:11:57.400 not going to be easy for the FTC to force 0:11:57.440 --> 0:11:58.120 a breakup here. 0:11:58.240 --> 0:12:00.319 I see Honor rog just nodding his head from sgo 0:12:00.440 --> 0:12:02.640 right now. I'm wondering your thoughts on this an a 0:12:02.679 --> 0:12:03.960 rug and if you have anything to add when it 0:12:03.960 --> 0:12:06.640 comes to AWS, because certainly they're the dominant play. I mean, 0:12:06.640 --> 0:12:08.160 they invented the category, no question. 0:12:09.120 --> 0:12:11.800 Yeah, but they invented the category and Microsoft's been closing 0:12:11.800 --> 0:12:14.439 that chair like for a while now, and in AI 0:12:14.880 --> 0:12:18.720 Microsoft doing far better. Googled growing much faster, Microsoft going 0:12:18.840 --> 0:12:22.040 even faster. So nobody can say that they dominate the 0:12:22.040 --> 0:12:24.560 cloud space right now. You know, they have to watch 0:12:24.600 --> 0:12:27.079 the heels at any given time you see the number 0:12:27.080 --> 0:12:30.120 of product releases from AWS in the amount of you know, 0:12:30.160 --> 0:12:32.760 marketing they're putting behind it just to say that they're 0:12:32.760 --> 0:12:35.560 not behind Microsoft, So I would not say that they 0:12:35.559 --> 0:12:38.160 are monopoly when it comes to cloud. I mean, there's 0:12:38.200 --> 0:12:39.320 so many players at this point. 0:12:39.320 --> 0:12:40.800 Well's so funny that you say that I'm reading to 0:12:40.840 --> 0:12:42.920 the press release right now and there's like a ton 0:12:43.000 --> 0:12:46.520 of stuff on AI. But it's a lot of It's 0:12:46.600 --> 0:12:48.679 just a lot of stuff, And I guess, you know, 0:12:49.200 --> 0:12:50.960 what are you looking for an a rag? Is you 0:12:51.040 --> 0:12:53.480 read through like what they're doing here in Amazon Q 0:12:53.880 --> 0:12:56.160 and what they're doing with salesforce? Like like what is 0:12:56.200 --> 0:12:58.440 it that you're looking for as you pars through? What's 0:12:58.480 --> 0:12:59.480 a lot of words. 0:13:00.720 --> 0:13:02.760 Yeah, So the way you want to think about it, 0:13:02.800 --> 0:13:06.280 Microsoft disclose some numbers. When we back into that, it 0:13:06.400 --> 0:13:09.880 shows us that Microsoft just on their cloud business is 0:13:09.920 --> 0:13:13.120 generating a billion dollars a quarter at this point, which 0:13:13.160 --> 0:13:16.240 is a quarterly revenue of four billion dollars. Amazon's not 0:13:16.280 --> 0:13:18.280 going to give any close to number like that. They 0:13:18.280 --> 0:13:21.160 are nowhere close to that. So I think that's basically 0:13:21.200 --> 0:13:24.040 shows that the competition is really tough right now and 0:13:24.080 --> 0:13:26.800 they have to launch all these products in order for 0:13:27.080 --> 0:13:29.960 enterprises or companies to embrace it so that they can 0:13:30.040 --> 0:13:32.760 down the road give that number out. So if they 0:13:32.800 --> 0:13:34.600 give a number out, I think it'll be a very 0:13:34.720 --> 0:13:37.440 very different ballgame tomorrow, but I doubt that's going to 0:13:37.440 --> 0:13:38.040 happen today. 0:13:38.080 --> 0:13:40.400 Put on my I'm you know, in our conversations last 0:13:40.400 --> 0:13:43.400 week about meta platforms, we spoke to your colleague Man Deep, 0:13:43.480 --> 0:13:48.679 saying a lot about how advertising was, how AI had 0:13:48.720 --> 0:13:51.880 meta platforms was being used to really help with advertising, 0:13:52.160 --> 0:13:54.120 And I kind of want to frame the same question 0:13:54.240 --> 0:13:58.720 to you. It's about e commerce and how what Amazon 0:13:58.840 --> 0:14:01.079 is doing when it comes to We talk a lot 0:14:01.080 --> 0:14:04.160 about that in the context of AWS, but how does 0:14:04.280 --> 0:14:07.120 it help the core business getting people to buy more 0:14:07.160 --> 0:14:10.400 stuff and get more stuff delivered at Amazon? 0:14:11.800 --> 0:14:15.360 Yeah, I mean AI. Generative AI especially is crucial for retail. 0:14:15.400 --> 0:14:17.520 In fact, we think it's one of the biggest drivers 0:14:17.840 --> 0:14:19.720 to the search or the next leg of growth that 0:14:19.760 --> 0:14:22.400 you're going to see online. When you think about generative 0:14:22.400 --> 0:14:25.239 AI and you think about search, right, we go shop online, 0:14:25.480 --> 0:14:28.280 we put something in the search bar, and we get 0:14:28.280 --> 0:14:30.840 a million responses. Half of them, more than half of 0:14:30.840 --> 0:14:33.720 them are not relevant. So as you increase the relevancy 0:14:33.880 --> 0:14:37.200 of the search, you're going to also increase conversion because 0:14:37.240 --> 0:14:40.160 you're giving customers what they want, so huge huge ROI 0:14:40.240 --> 0:14:42.920 and getting the search right. And then outside of that, 0:14:43.000 --> 0:14:45.160 you know, there is there are a lot of tools, 0:14:45.200 --> 0:14:49.200 whether it's using genai to create your marketing, to create 0:14:49.320 --> 0:14:51.320 product there are so many things that you could do 0:14:51.400 --> 0:14:54.720 with genai and on the e commerce product side that 0:14:54.760 --> 0:14:58.080 are really beneficial to the customer experience. And in fact, 0:14:58.120 --> 0:15:01.760 you know, outfitting yourself for example, using AI tools, using 0:15:01.880 --> 0:15:04.960 visual tools to be able to create these scenarios. It's 0:15:05.000 --> 0:15:07.960 all about increasing conversion when it comes to using AI 0:15:08.280 --> 0:15:09.080 for e commerce. 0:15:09.320 --> 0:15:12.280 All right, guys, I'm still watching shares of Amazon up 0:15:12.320 --> 0:15:14.840 about two point six percent this as it we mentioned 0:15:14.880 --> 0:15:19.160 earlier reporting a strong cloud unit sales, rising AI demand. 0:15:19.200 --> 0:15:22.600 But again that second quarter net sales forecast is a 0:15:22.600 --> 0:15:25.280 little bit light than what the street is forecasting. What 0:15:25.400 --> 0:15:27.560 could they say analog on the call that would make 0:15:27.600 --> 0:15:29.800 you a little bit more nervous because right now investors 0:15:29.840 --> 0:15:31.600 seem to be pretty pleased with this report. 0:15:33.000 --> 0:15:34.400 Yeah, I mean in the cloud side, if they go 0:15:34.440 --> 0:15:36.320 out and say that the growth for next quarter is 0:15:36.320 --> 0:15:38.200 going to be much lower than what it is, and 0:15:38.320 --> 0:15:41.720 it's a cause for concern because their competitors have not 0:15:41.800 --> 0:15:44.840 said that. So one would imagine that if the current 0:15:44.880 --> 0:15:47.800 quarter growth rate was around seventeen percent, they should grow 0:15:47.840 --> 0:15:50.760 in that same brain sixteen seventeen percent in the next quarter. Also, 0:15:51.120 --> 0:15:52.720 if they go out inside it's only going to be 0:15:52.800 --> 0:15:56.080 ten twelve eleven, then I think that's a problem. 0:15:56.320 --> 0:15:58.200 Same question to you put and what could they say 0:15:58.200 --> 0:15:59.600 on the call that might make you be a little 0:15:59.600 --> 0:16:01.440 bit more head in on this company. 0:16:02.360 --> 0:16:04.840 If they say retail growth or the e commerce business 0:16:04.880 --> 0:16:06.960 has slowed to little single digits, Okay, I would be 0:16:07.000 --> 0:16:08.680 a little concerned or even turn negative. 0:16:08.760 --> 0:16:11.440 All right, listen, We so appreciate both of you weighing 0:16:11.440 --> 0:16:14.440 in on a company that's not a little complicated. I 0:16:14.440 --> 0:16:16.080 don't know that I want to say complicated, but yeah, 0:16:16.080 --> 0:16:20.480 a lot of moving pieces and so we do. Yeah, 0:16:20.520 --> 0:16:22.920 and so great to get both of their perspectives. Put 0:16:22.920 --> 0:16:25.120 them Goyle, she's senior analysts for e commerce at a 0:16:25.200 --> 0:16:29.440 leisure off price retail on Zoom from India. 0:16:29.800 --> 0:16:32.000 It's two am, so thank you put them. 0:16:32.000 --> 0:16:34.800 Oh my god, we owe you, We owe you. And 0:16:34.880 --> 0:16:37.880 Anna Ragrana always so helpful when we have to go 0:16:37.920 --> 0:16:40.960 through these reports. Senior technology analyst Bloomberg Intelligence joining us 0:16:40.960 --> 0:16:42.760 from our Chicago But are really both of them, We 0:16:42.880 --> 0:16:44.360 so so appreciate the insight