Amazon's low valuation (EV/EBIT 22) makes it a potential short-term buying opportunity.

Even Amazon's stock, for example, has declined over the past two months , yet many are currently investing heavily in the sector.

We are seeing some kind of impact on platforms like Amazon, for example, because Amazon has banned Muse from shopping, I believe, on its site.

Amazon, however, is not actually involved in this area, and it appears to have blocked the Muse app from accessing it. Amazon shares are currently trading at an enterprise value to earnings before interest and taxes (EV/EBIT) ratio of 22, their lowest in 25 years.

This brings a sense of reassurance to all these matters. You have to assume that all of these executives are very smart, and they will eventually come up with a solution, but what this suggests is that Amazon could be a very good opportunity in the short term.

As you know, Toby, we've done deals on the site for Amazon, Meta, Microsoft, and Google, and they've all been successful so far.

but Amazon's stock is down a bit from where we started, but the put option selling was successful, we even sold a put option at 250. It was executed. I believe the share price was around 246 at the expiry date .

So, we got a premium when we sold the put option initially , and then we sold a call option at 260. Thus, we ended up owning the stock at the breakeven point, i.e., around 246 or 247, and then we were able to take advantage of the stock rising to 260, and now the price has dropped again.

In fact, there was a trading suggestion today on Amazon to sell a put option at a lower price. I think we believe in the business models of Amazon and Metal. And when you can buy its shares at valuations that are more attractive than historical averages, and if you believe that the ultimate return on capital invested in these massive capital expenditures will be good, then I think Bill Ackerman has made a good case for it.

Well, in short, they are meeting the demand. This is not simply about building a surplus; the demand is there. So they get contracts for these things, which are time-separated contracts and the like.

That is , if you get a good return on investment, you will see profits and free cash flow rise once we get to the other side of the capital expenditure cycle and it becomes within their reach .

Yes, their returns may increase slightly, but it is clear that the return on investment they are targeting is much higher.

Yes, this is the return on invested capital for those who do not follow it closely. I think a good analogy is Amazon during 2020. They built up a lot of production capacity , and I think the argument was that they overdid it a bit in building that capacity during 2020 because everyone was staying home.

They were using all those services far too much . Amazon may have overestimated future demand at that time, so they built slightly ahead production capacity , and were penalized for it in the short term because it negatively impacted their free cash flow due to the capital expenditure in that short period.

But because of the high demand and its rapid growth, they have exhausted all that production capacity over the past few years , and now they are building more, and I think that is what is really happening.

Even if they overestimate short-term demand, demand will eventually catch up with this spending.

But it is certainly not clear whether there will be a single winner, or I think it is more likely that there will be several winners. There is one interesting thing to consider, which Jake Taylor and I have talked about a bit, and that is consumer surplus.

Product surplus is when they expand and then capture a market share, as is the case with Microsoft, which has a huge product surplus from its office suite, but there is also consumer surplus, which is why people continue to use it.