00:00So let me give you some context. A year ago in the second quarter,
00:03AWS growth rate was 17.5% in constant currency. Last night it was 39%. So just give you some
00:11context of growth acceleration of the biggest cloud provider of quarterly revenue of $42.2
00:18billion. So that's annualized revenue of about $170 billion and with operating margins of 39%.
00:25Absolutely stellar. So what's the story going forward for Amazon as it relates to capital
00:32spending, maybe their view of free cash flow? What's their strategy these days?
00:39So one of the biggest and the most important things about AWS is, given that it is the largest
00:43cloud provider, it houses most of the corporation's data that people that are in the public cloud.
00:49So if you really need to infuse AI into your day-to-day operations, you know, AWS is one
00:56place to go. Moreover, they are the preferred cloud provider of Anthropic, which has seen an absolute
01:03stellar increase in their ARR over the last few months.
01:07And, Ragh, we saw from Microsoft, I can't imagine the inertial force it takes to lift Microsoft
01:13almost half a trillion dollars. You absolutely nailed this call. Every fancy guy in a Bruno,
01:20what's it called? Bruno Cuccinelli? Bruno?
01:23Cuccinelli.
01:24Thank you. Bruno Cuccinelli. Thank you there. Anarag, every fancy tech boy in a black Bruno
01:29Cuccinelli t-shirt today has to take a lesson away from Fortress Nadella. What did we learn
01:36from Microsoft that every other tech company has to do? Well, one of the most important comments we
01:43heard on the conference call was how forceful he was about telling people not to depend on just one
01:50model or two models for their future and control their data internally, make sure everything that
01:56they own remains there and is not given to the large, only the frontier models. I think that is
02:02going to be a message that's going to resonate a lot, especially with new open weight or open source
02:07models coming in, because he wants to keep control of everybody's or their client's destiny and not
02:15let the labs get away with all the intellectual property. Anarag, I'm doing my amateur take here,
02:20folks. I use the Bloomberg Professional Service. Tom Secunda taught me the WACC screen. Okay, Anarag,
02:26here we go. The return on invested capital of Microsoft is 24-ish percent. Apple's is 60 percent.
02:34Apple's popping cash of $140 billion up, you know, two quarters in a row up to a new level. Amazon
02:42is
02:42doing what Amazon's doing. Do we still not understand the profit-making machines they are
02:49that allow for the future investment? You're absolutely right about it, but there is also a
02:55question. And you have to, you know, think about the other side of the argument as well. You know,
03:00at what point the number becomes very big? For Amazon, for example, we are expecting $220 billion
03:06just in this year. Next year, it's going to go up. It's okay. So, it's about $250, $260 billion.
03:12What happens after that? So, you have to come to an idea, because very soon, these numbers will get
03:17to a point, it'll be very difficult to fund them. So, we don't know whether that year is $28, $29,
03:23$30.
03:24And if you are doing a DCF, you do need to have that framework in your hand as well. Apple,
03:29probably the easiest one to understand right now. The only issue they are facing is supply issues,
03:34which means if you can't buy the computer today, you will buy it three months from now. It's okay.
03:39But it's not changing their business model, as we know.
03:43Yeah. Paul, I just, we need to be clear on jargon. DCF, I think, is discounted cash flow.
03:49That's what I remember from business school days. Thank you. Nailed it.
03:52Anurag's way ahead of us. Anurag, as to the Apple story here,
03:56stocks trading down, you know, 6%, 7% here in the pre-market here. Talk to us about what you
04:00learned on the call last night from Apple and their business outlook.
04:04I think the results were very good. And, you know, barring one minor miss, I think overall things were
04:09very good. But the call actually told us a lot of different stories that FX is hitting them quite
04:14a bit. But the bigger problem is that they are really supply constrained right now, which means
04:19the parts, they don't have to take care of the strong demand of the phones and the Macs that they
04:25are seeing. And what that is going to do is it's just going to delay growth rate. So it is
04:30very much
04:30likely, they've already given guidance for the next quarter, which is September. But if this thing
04:35doesn't get resolved, you know, I think there is risk to the December quarter growth numbers also.
04:40Okay, I'll go with that. But, you know, I love this guy out on Twitter, Hedgy, Hedgy Markets,
04:45had a beautiful summary of this, the cash, the balance sheet, etc. Isn't there supply constraint
04:53good news because they have a massive demand reality? I mean, the reality is everybody,
04:58Michael Barr wants a new NIO, right?
05:02Yes, I'm completely with you on that. There is no doubt about it that you're not going
05:06to lose those customers. But you also look at Apple's valuation vis-a-vis Microsoft or
05:10Google or Amazon at this point. I mean, it's an
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