Amazon是S级投资，因其电商护城河和AWS的主导地位；AI带来的下行风险有限，并可能提升电商渗透率和广告收入。

Um I think you know both Google and Amazon had similar results where cloud grew just ex almost wouldn't say exponentially but accelerated in terms of growth um to I think growth rates especially for Amazon that we haven't seen in many years.

Um, if we look at these and I would have to choose just one company that still exists at that point, I think it would be either Google or the next one that I pull up now and that would be Amazon.

Yeah, I mean Amazon is um is another one. I mean obviously like it has such as such a rich history of of of doing incredibly well and obviously the whole Amazon Web Services thing was this massive um tailwind for the business.

Um I still use it a ton. I think probably yeah you guys also use it a ton. So you know in in the sense of me doing my online shopping I don't really honestly think that there's anything even close that would actually force me to use something else. Obviously, if there's a product that Amazon doesn't sell, well then, yeah, sure, I'll I'll go buy it off of a specific brand. But in terms of um like the actual e-commerce side of things, I don't see myself actually moving away from Amazon.

Um but again, obviously, Amazon's not just an e-commerce business. It obviously has the the Amazon web services. Um so, I don't I I don't know. I think I I don't know if I could put them in the S tier either, to be honest.

Um obviously, they're spending a lot of money as well. Uh, I can't remember what the exact figures are. I'm not sure if it's quite at Google's level, but it's it's I'm pretty sure. Yeah, it's it's definitely up there. Um, and similar to all these other businesses. We don't know how those uh how those those investments are going to pay off.

So, just given the fact that, you know, I still see myself using Amazon and I don't really see any other alternative right now. Um, I think a for me probably makes the most amount of sense. Um, so yeah, I I I I'm happy to hear what your guys' thoughts are on that, but uh I think a A feels right for me.

Uh, I think Amazon is actually probably the only S tier company I think I see on the list. Uh, that comes with like a huge amount of bias. Uh, you know, I I I literally before this call uh had two Amazon packages delivered to my door. I'll probably have more. I get I get like multiple a day. I live on I live on Amazon.

And so it's like uh I I for one think that that e-commerce business is just it's a flywheel that is been spinning for so so long. Um nobody can touch it. I mean Walmart is is sort of trying. um and they're really the only possible company that could um touch re Amazon's e-commerce presence in in the US.

But I just think the flywheel in in the moat is is is so strong u of like you become an Amazon Prime member and it's unlimited free shipping and then you know like there's all these incremental products that you you know maybe you sign up for uh streaming on um Amazon Prime Video. Uh you sign up like me for Whole Foods delivery. I think you know that's a great that's a incredible product. 10 bucks a month. um hard to imagine they're making any money on it, but again it's it's it's sort of like the Costco model um which I think uh you know Nick Sleep talks about being basically the best business model there is right I mean it's like very hard to imagine a better business model than scaled economies shared because there's just there's no way to compete with it um they're using their uh their scale advantage to return all the surplus to customers and then just continuing to to reinvest and compound that advantage.

And then you know AWS is a whole other whole other beast but you know like that seems like uh an incredibly promising wellestablished business. Um, and then there's also, you know, a huge advertising opportunity at Amazon that they've, uh, increasingly been monetizing on, you know, paid search results of, uh, you look for, uh, you know, I don't know, you're buying deodorant on Amazon and it's like Degree Men pays to be the first result, you know, like there there's a huge advertising opportunity that pairs uh, very naturally with the e-commerce that they do.

And so for me, the reason I would say kind of S tier longer term for Amazon is um I don't see a way in which AI fundamentally threatens their business. Like I don't see very much downside risk. Um you know there is Google is as good of a business as it gets with the caveat that um their core search business there is still a question mark around that. with Amazon. Um, we we we pretty much know that AI is probably going to make it easier to shop online. It's probably going to increase e-commerce penetration. So, they're going to benefit on that level. Then, you know, obviously that ripples across and benefits them on the advertising front, right? If there's more e-commerce purchases happening where uh, you know, digital shopping happening, there's going to be big, you know, companies are going to have bigger budgets to pay for digital advertising. Um, and then, uh, you think about how AWS would benefit from, you know, continued, uh, demand for data centers and AI compute.

It just feels like you're getting Amazon at one of the best businesses in the history of capitalism at a very reasonable price with very limited downside compared to all the other companies on this list that I think face real risk of disruption. Um and a potential uh you know a potential upside that is uh like you know they have they have a lot to g they can gain if things go well and and not a whole lot to lose. So uh yeah that's my Amazon's my S tier pick.

I think you covered it. I mean Amazon's my biggest position by now in my portfolio. So I will certainly put it there put it there too. Um actually you know this is a good one too. Um, AI automation would also be a huge tell when I think Amazon and you just said it. When I think about Amazon, um, I looked at so many e-commerce companies. It's just baffling to me how dominant Amazon is because in pretty much all other markets, there's at least one big competitor where you could argue that um there's at least game for who's the number one spot, right?

Amazon is so dominant in in North America and in Europe um that basically there is no number two at least no one that I can think about you know actually overtaking Amazon then you just have a flywheel which is so strong and to the automation point and I would also add robotics to it. I think a huge part of you know the the cost that Amazon has is in its warehouses where you can put robots in and you know 10 20 years time and this is the time horizon we're talking here that they could literally save tens of billions of dollars if not more um just in the warehouses. Plus, we didn't even yet talk about the chips business, right, which has a $50 billion run rate um today. So, they just keep spinning out businesses that are working phenomenally well.

Um and yeah, as you said, like there's such a direct customer um relationship that they have through the e-commerce business. And you know often times people talk about the e-commerce business and they say you know there's not a much not a lot of money to make in their business but all the flywheel effects that you get from that and just you know the um the customer retention to some extent is I think something that no other company that we have on the list here has. So um I actually thought Google would end up in S tier and then probably have to fight for Amazon in the A tier but I'm glad that we got it the the other way around and I I I fully agree.

the range of possibilities is so it's like an order of magnitude wider than what could happen with Alphabet and and Amazon where you know like there's still a wide range of possibilities um but Alphabet and Amazon aren't aren't going bankrupt

If we're talking about if we're talking about relative to to Amazon and Google, like it almost might be an F.

if you're comparing this to Amazon or Google I mean not even close to the same quality in my opinion where you know they say Amazon's a phenomenal business but there's some question Mark around the returns on invested capital for hyperscalers which we also mentioned given these you can't otherwise say massive capital investments

and especially if you look at businesses like Amazon or Google those businesses will be as strong as ever right like either AI will change how these businesses work but then they at the forefront because they're doing the investments and if it doesn't work out well well then they burned a lot of cash but they're also producing enough cash so maybe you know it burns two or three years of free cash flow which is not great but if that's the worst case outcome and we talking about a coffee can portfolio

I mean we put Google and you know Amazon here um in the ANS tier and then we put anthropic and uh open AAI in the ENF tier those have hundreds hundreds of billions in the backlogs of Google and Amazon.

I think the biggest risk for me is that currently if you look at the market valuations and I really liked Google at below $200 and that's where I built my position. Um I think that was a fair valuation for both of these companies now after earnings especially for Google and Amazon.

If you just ask me for the next I don't know two to three years I think things could also I mean there's a lot more risk um than there has been five years ago because what the market is currently valuing are numbers that have the idea in mind that anthropic and open AI would literally spend hundreds of billions of dollars in you know especially data centers but especially for the cloud with these companies and I think that's the biggest risk for me um where if I look at the backlogs and they look fantastic and most of them um you know they only run for 24 months So basically you would need Anthropic and OpenAI um to be viable companies and able to pay and raise money for the next two years which I think is reasonable um and yet I think that's a big risk um that a lot of the you know the backlog that Google and Amazon have and basically all the hyperscalers and many other companies in this field um that something will happen to that similar to what we saw in saw in 2000

um Microsoft has this huge distribution advantage which is one of the most important things in AI and yet if I compare them to to Amazon and Google I just don't see them at the same level if you ask me 30 years out which company would I rather own.

money from me after Amazon just because their ad platforms on uh Instagram which is their good and though I because about not being good for society with you um I can't remember if it's the province of Quebec which is in Eastern Canada or city in Quebec they basically banned um I think ban mobile phones from being at uh at schools and I' I've heard in in my own province as well that they're thinking of doing something similar.

and you know basically you could say that Amazon has a similar size ads business plus many other businesses that produce tens and hundreds of billions of dollars. Although I got to say I think Sean you agree companies like Amazon or Google they are there for such a long time by now. I mean usually we you see these lists of like the top 10 20 um companies in the S&P 500 and how they change after 20 years. Well this time it should be around time for those companies changing. I don't yet see it. Um so I do have some confidence that we will see many of them in the future too.

Not to be morbid, but in 30 years, there's a decent chance that Elon has died on right to Mars and Amazon's Leo has completed Stling's first mover advantage away.

So a lot of the you know we talked about the the circle of the circular deals and the deal flow generally in AI. It seems to be that whenever you look at Nvidia the market doesn't buy it when you look at Google or Amazon and their current valuations the market thinks that the money well for anthropic and open AI will actually land there.

But I also believe we just talked about the chip business of Amazon and you know many other companies will be in that space too.

but you know, with other businesses like um Alphabid and Amazon working on their own chips. I mean, who knows if their chips are even going to be in the lead and who knows how many years in advance.