AI helped Amazon march to a $2 trillion valuation, says Maxim's Tom Forte

Good to catch up today. I'd love to actually start by saying Amazon almost three years ago hit $1.9 trillion in market cap. So what happened in the intervening time post pandemic that I guess the street backed away from the from the name and is now in a sense rushed back in to to rediscover and created this catch up move to some of the other multi trillion dollar names. Yeah, thanks, Mike. So what happened was you had initially investor enthusiasm that the pandemic was going to cause an acceleration in e-commerce. And what we found is that when the stores opened again, consumers return to physical stores and what's enabled to March to 2002 trillion rather is AI. So when you think about AIA, lot of the story today has been chips and I would say as far as near term benefits the profits and sales from AI. And then I would say second the chips is the hyperscale cloud computing companies, Azure, Amazon, Google Cloud. So I think Amazon's ability to exploit AI after that initial pause and pull back in stock when we realized that e-commerce penetration wasn't going 100% is what lifted the shares to that $2 trillion mark. So what I guess at this level at this valuation set up is, is the is the bull case. I mean AWS, I guess we can really talk about how exactly we want to, you know, capitalize that revenue and earnings stream. It's it's an enormous business if it was standalone relative to other, you know, software companies. But what's the, I guess the, the bullet points on, on why it goes higher from here? The bull case for Amazon today is that under Andy Jesse's leadership, he's transitioned the company to focus more on higher margin services and less on 1st party retail sales. He's also taken a iterative and thoughtful approach to adjusting its cost structure. And this enables Amazon now to invest in the future and today generate significant margin in cash flow. And I think that's very important. Now things early stage initiatives like healthcare could contribute to the move to 3 trillion from 2 trillion. But bread and butter right now, cloud computing, advertising as well as continued growth in the mature e-commerce asset could enable Amazon to hit 3 trillion without any contribution from healthcare. So it's higher revenue in the high margin services that I think will drive the stock higher from today. How many how many trillions of market cap do these companies need to get to but before antitrust concerns really do come to the fore and represent a meaningful threat to their businesses? So first and foremost, I think 1 trillion is the new 100 billion for these mega caps. And I think what we're seeing with NVIDIA, Microsoft, Apple, Amazon is that investors are flocking to these mega caps and concentrating their portfolios. And I think that's also what's contributing to Amazon's performance here. On the antitrust regulatory concerns, it's still a huge concern. They're being sued by the FTC for antitrust. What I think is unique to Amazon versus Apple and others is you can make an argument that if it was three stocks, first party retail stock, third party retail stock, cloud computing stock, it could be worth more than two trillion. So I think that Amazon's unique among the antitrust plays there where if it resulted in a separation, 3 individual stocks could collectively be worth more than one stock. Yeah, it seems like that's how the Street might view it, at least at the outset. All right. Well, a trillion being the new 100 billion, it's like 40 being the new four years old, which in this market maybe makes some sense. Tom, thanks very much. Thank you, Mike.