Both Amazon's tech and retail pillars 'are starting to fire', says Roth MKM's Rohit Kulkarni

Well, let's bring in Rohit call Carney. He's senior Internet analyst at Roth MKM Capital Partners as a buy rating the $210.00 price target on Amazon. It is his top mega cap idea. Rohit, what do you think about Matt Garman, what he's saying coming in and do you buy the idea that they're not behind in AI right now? Matt Garman is is at a spot where he needs to prove out that AWS, the leader in cloud can maintain the leadership in AI in the next three to five years. 23 was a year when investors didn't believe that that could happen. The 24 has gotten off to a start where investors and the narrative is starting to slowly shift in the favour of Amazon, where accelerating AWS growth, $100 billion ARR company is helping Matt Garman shift that narrative in his way that, look, we built the best stack for Internet and we can build the best tech stack for AI. Whether they can do that over the next three to five years remains to be seen. The competition is much tougher this time around. Microsoft is opening in its sea in its wings. So we shall see. But I think they're playing catch up. And so far what we're hearing is very encouraging and that's why Amazon is our top idea for second-half. Aside from raw revenue growth, what are the metrics investors should watch to check on whether that's happening? Revenue growth and just the the dispersion between the revenue growth that Amazon is showing versus what Microsoft and Google would be demonstrating over the next couple of quarters. Also, each of these companies have their own flavour of showing what the future revenues could look like. Is it performance obligations? Is it commitments and all those kinds of things? Amazon has been doing a lot better in the last six months versus peers. That's a great leading indicator. RPO revenue performance obligation, that's that's a positive sign. And finally, anecdotes around AI wins versus other companies. I think they talk about Pfizer, they talk about self driving cars, they talk about some other anecdotes here and there. But I think just better disclosure about how much AI native workload is coming to AWS versus just the recovery from almost mini IT spending recession that we had during 22 and 23. So, I mean, we're focused on this interview in Garmin specifically today. But this month also marks the three-year anniversary of Andy Jassy taking the helm from Jeff Bezos. The stock had hit a record high just before just as that was happening. And then it petered out from there. It had raised some questions initially around what Jassy's tenure would look like, how long it would last. The fact that we've just had this blistering rally from 1 to $2 trillion in a matter of weeks. How much further can it run? How much is this is AWS versus what we're seeing in e-commerce, what we're seeing in advertising, what we're seeing with cost controls continuing to boost profit margins? I think it's all of the above. I think it's it's there were two biggest questions coming into 24 for Amazon. Can they provide accelerating growth in AWS? Yes, they did. And second biggest question was can they demonstrate rising profitability in both North America and international retail? Yes, they did. And we are approaching probably record high margins in retail in the next 6 to 9 months. That's that's what is something that investors strongly believe who are bullish in Amazon that retail profitability is going to help it help go beyond what we even saw in 20/18/19 levels. So that's a fundamental restructuring of the business that Andy Jesse has kind of orchestrated and that is going to help the stock while doing that AWS narrative is slowly shifting in their favour. So both, both the pillars in Amazon's kind of growth engine are starting to fire while they're outperforming on advertising, while they're including new layers of growth like supply chain as a service, care related new things. So, so Amazon is coming together unlike what we saw in 22 and 23. And so that's why we like it over the next, not just six months, but probably into 25.