Amazon's Earnings: Worst Stock in Nasdaq 100, AWS Underperformance

Amazon's Financial Performance

• 📉 Amazon is now the worst-performing stock in the Nasdaq 100 and is in the red for the year.
• 💡 Investors had anticipated a strong turnaround for AWS this quarter, which is the company's profit engine.

AWS Turnaround Challenges

• 📊 While AWS posted its first revenue beat in a year, growth is stuck at around 17%.
• ⚠️ Margins are thinner, and AWS's share of overall operating income is shrinking.
• 💰 A key concern is that AWS is not generating cash at the same rate as before.

Cloud Market Competition and Backlog

• 📈 AWS backlog (signed cloud contracts not yet fulfilled) rose 25% to $195 billion.
• 🚀 This growth lags behind competitors like Microsoft Azure, which jumped 37% to $368 billion, and Google Cloud.
• 🔑 The backlog is increasingly viewed as the best proxy for future revenue growth.

Deal Flow and Chip Alternatives

• 🗣️ On the earnings call, Andy Jassy pointed to Amazon's in-house chips as a cheaper alternative to Nvidia's Blackwell GPUs.
• 🛒 However, cloud buyers appear to be leaning toward Nvidia's vertically integrated stack rather than focusing solely on cost.