Amazon's Cloud Unit Posts Fastest Growth Since 2022

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00:00You've still got an outperform rating on the stock. You think the price could go higher from

00:03where we are. Currently, 10.8 percent. You see it hitting 300. Brad, just talk us through what

00:09you liked in the numbers. Yeah, I think obviously the reacceleration to 20 percent on AWS and Q3

00:17was like the headline critical metric they had to do. They did it. And so that really got the

00:24stock going. And then I think as you think about going forward, they're getting this capacity

00:31deployed faster than we would have thought maybe a quarter ago. And they gave some nice detail around

00:37some of the power, the gigawatts that they've been able to deploy and some forward commentary there.

00:43And it just comes down to kind of simple math. They're not saying they're going to accelerate

00:48necessarily on AWS. But if you do the math, it implies that they probably will. And that means

00:53there's probably a lot of upside to street numbers. And so that was the point we were making

00:57in our note. I mean, 3.8 gigawatts is massive when you think about each gigawatt, potentially up to a

01:02million homes. That's how much they put on in the last 12 months. What are you making the vertical

01:07integration here as well? The fact that they're saying that their Tranium chips are already a

01:11multi-billion dollar company. How much does that build to future revenues? Yeah. You know, Tranium,

01:18to go with your second part first, Tranium 2 is largely being used for Anthropic, which is kind

01:25of the major enterprise player in the generative AI space. They're going to continue to grow a lot.

01:31They're going to double the number of chips at the Rainier site by the end of the year. So it's,

01:38you know, that is going to continue to scale up and drive a ton of revenue growth. And it is material

01:42to next year. And this is $130 billion business. So it gives you a sense. In terms of just, you know,

01:49taking vertically integrating, it's massively important, right? The power grid is not set up

01:55for these data centers. And they have massive needs, massive cooling needs, massive water needs.

02:01And so it has and will always likely continue to make sense for these guys to make sure they can do

02:09that on their own or at least become less tied to third parties. So I think it's the right thing to

02:15do. Andy, Jesse's time and time again been like supply is the issue here, not demand, Brad.

02:19What's interesting is that generative AI gets rippled through the entire business. We're looking at

02:23Rufus, of course, which is helping us decide what we're going to be buying on Amazon if we needed any

02:28more help on that. That's saying they could add another $10 billion. It's interesting to then

02:33dovetail that with what came at the beginning of the week. Look, corporate jobs are going at Amazon.

02:38And in many ways, Andy Jassy steered us to that four months ago. Is that inevitable when they're

02:43looking to bring generative AI as a way to catalyze the business?

02:49Yeah, I mean, kind of two parts of that, right? Rufus is really intended to sort of,

02:54you know, add a, we'll call it a tailwind to your shopping experience and your conversions. So

02:59literally get you to buy more stuff. So that's that part of it. The headcount thing is tricky because

03:06you're right. Like initially you kind of follow the fact pattern and then what we know of some

03:12other companies and the efficiencies they're getting. Clearly generative AI is, it is very

03:17likely that it is contributing to job losses right now. And some companies are overtly saying it.

03:24Last night, you know, Andy Jassy, the CEO said that largely it was kind of a function of overhiring,

03:32middle management, you know, trying to sort of flatten the organization a little bit more. So

03:37not related to generative AI, but I think by all intent and purposes, you have to think that

03:42trend is going to continue. And yeah, it's, it's a little concerning from a deflationary standpoint,

03:48point I would say, but you know, that's what we know so far.