Amazon (AMZN) – Bullish Notes – December 1, 2023
Amazon hosted its AWS re-Invent conference this past week. In it, it touted advancements in its chip sets and Bedrock model, deepening partnerships with Nvidia (with a new software and supercomputer integration), GenAI apps like CodeWhisperer and broadening foundational model integrations. It will also debut a new chatbot in the near future called Amazon Q, a new GenAI image generator and new cleanroom (layer of data security) functions for GenAI. I’d think this will be used to bolster product discovery and customer service in the marketplace. @BigBullCap on Twitter published a JP Morgan note from the event which I wanted to highlight. Thank you to him.
Per the institution, the event showcased a materially diminishing gap between Amazon’s GenAI capabilities and leaders in the field. It sees significant opportunity for GenAI monetization via new workload demand, more data storage demand and also apps like CodeWhisperer. I’d have to agree with them on both accounts. This is what I’ve been arguing since I started the position in May and it seems like analysts are agreeing more and more. It was silly to cast Amazon and AWS aside as unserious competitors in GenAI. It has the data, the cloud infrastructure, the talent and the balance sheet to carve out a very nice opportunity for itself. Finally and vitally, it sounded like workload optimization trends for AWS are in-line with what leadership guided to on the last call. It set a $190 price target which is less important to me than the fundamental takeaways they arrived at.
Wells Fargo channel checks also point to continued market share gains across international markets. It sees this revenue coinciding with expanding margins as well.