Amazon (AMZN) is touting optimism for the future despite a difficult year for big tech.
CEO Andy Jassy said in his 2022 letter to shareholders, that the e-commerce’s focus on cost cutting will help growing some of its more unproven businesses.
While nearly all analysts are bullish on Amazon’s prospects, one is decidedly bearish.
BNP Paribas Managing Director, Stefan Slowinski, has a rare underperform rating on the stock.
Yahoo Finance’s Dave Briggs asked the lone bear what would make him become part of Wall Streets bull herd.
Slowinski says Amazon will be successful with A.I., but ultimately says it’s “not yet clear” as to how the company is going to use generative A.I. in its consumer services.
See the full interview here.
Key Video Takeaways:
0:00:16 – Amazon will be successful with A.I.
0:01:08 – Wall Street focuses on three things with Amazon
DAVE BRIGGS: Jassy also talked about generative AI projects, which he says are going to be transformative. What would cause you to switch your evaluation, to join the herds of bulls on Amazon?
STEFAN SLOWINSKI: Yeah, look. I think Amazon will be successful with AI. If anything, they’re one of the creators of that industry, having been using AI for 20 plus years, since they were invented. Obviously, Amazon web services has the capabilities. Just like Google, they have their own large language models. They have their own semiconductors. They’re not necessarily reliant on external technology. And I think that they’ll leverage that through AWS to make that available to their enterprise customers.
I think that’s what we saw them announce yesterday. We’re not yet quite clear as to how Amazon is going to use generative AI in their own Amazon consumer services. So I still think that’s to come. So this is an exciting space.
I think Microsoft, through their OpenAI relationship; Google, just like Amazon, have their own capabilities; and Amazon will all be successful. But I think near-term, the market’s focused on three things. One is, what’s the cost? So we may not see revenue just yet, but will we see a tick up in CapEx as this move toward generative AI accelerates? And of course, for Amazon, people are sort of looking more for CapEx cuts and not CapEx increases.
The second one is, what is the product opportunity? I think with Microsoft, people see Microsoft 365, GitHub Copilot, and some other announcements they’ve made of real opportunities near-term for them to begin to monetize it. We’ve seen some other partners, like Salesforce with their GPT offering, Intuit now with Mailchimp, looking to monetize this through products.
And then the third, of course, is the platform opportunity, like I just mentioned with AWS, Google Cloud platform, Microsoft Azure, providing this technology to enterprise customers to bring their data onto their platforms, use these large language models to begin to train their own AI initiatives. So I think all three companies will be beneficiaries of that over time.