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Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

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Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#31

Post by koakuma-chan »

DaedalusII wrote: post #6
tucnak wrote: post #2

They always say it's about "AI," but it never turns out to be about AI. I wonder what's it about this time?

wall street analysts are starting to realise that software companies shouldnt trade on a P/E of 300. DocuSign is currently valued at 30 times its annual earnings. Adobe is currently 16. Amazon is 28 -- has been as high as 50 recently. NVDA is 44. Investors are basically starting to realise that enterprise are not going to subscribe to software like DocuSign for 50 years. They'll probably just move to odoo or zohosign…

Why would you put more money into Nvidia or Tesla right now? Don't you think they are priced in already?

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#32

Post by mullingitover »

robocat wrote: post #29
bhouston wrote: post #11

Earlier quoted context omitted.

I have read that numerous places and it seems plausible but it is beyond my investing experience. I think the new nominated Fed Chair is also a hard money advocate and is spooking USD alternatives (gold, silver, BTC, etc.) But hard money can be quite hard on the economy, so that could limit growth.

We should just blame "the willies". Investment is all about belief. When the root cause is the willies, then we hallucinate reasons together. Crypto and memes have demonstrated us a lot about the drives of individual investors. Unfortunately it seems that professional investors are not that much more rational (from my limited personal experience with a small hedge fund, and from my years of looking at markets). My fa…

Speculation involves belief, sure. However, there is hard math involved in markets as well, and the yen carry trade equation exists whether you believe in it or not.

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#33

Post by erfburfl »

mbreese wrote: post #28
ecshafer wrote: post #19

Earlier quoted context omitted.

The margins on tech/cloud are just so astronomically higher than retail. Places like Walmart or Costco are fighting for IMO AWS should be spun out as a separate company.

This makes me wonder if Amazon the retailer requires having access to AWS services “at cost” in order to be profitable. If AWS was spun out completely, would Amazon proper be able to afford their AWS bill of AWS had a profit margin on it. I’m sure Amazon.com would be fine, but it would take a chunk out of their margins. I’m also sure that their X% ownership of the spun out AWS would cover the difference.

[dead]

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#35

Post by pchristensen »

symfrog wrote: post #26
pfisherman wrote: post #14

Earlier quoted context omitted.

Oh boy, are you going to be in for a rude awakening. Might I ask what is your exposure? Because this does not line up with what I am witnessing day to day at all. This type of commentary reminds me of the people during the dot com boom who were adamant that e-commerce was all film flam and would never take off. Consider that it is possible that both (1) we are in an investment bubble and (2) we are underestimating th…

In what way is the long term impact of LLMs being underestimated? If anything, it seems that it has been overestimated in the past years and that something other than LLMs will be needed to reach the original scaled LLM hope of AGI.

Back when the Internet was America online and some CGI bin perl scripts, there were a lot of very lofty things said about the potential of the Internet in the future. I don’t remember any of them predicting the power of the tech would have over business, politics, media, and hours of every single day for billions of people. Even without AGI, it’s quite possible that were still underestimating. The effects of predictive, probabilistic computing 20 or 50 years from now.

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#36

Post by dd8601fn »

ecshafer wrote: post #22
bhouston wrote: post #9

Earlier quoted context omitted.

> software companies shouldnt trade on a P/E of 300 You are playing pretty fast and loose with your definition of a "software company" when you include Amazon and NVIDIA in your list. Amazon is many things but it is not a "software company" and neither is "NVIDIA".

50% of amazon operating profit is from AWS. NVIDIA's GPUs aren't really that much better than AMD if it weren't for CUDA. Software company is a pretty good description for both.

I’ve heard the same about Nvidia, quite a few times, but have never really understood it.

I don’t suppose you know a good “for dummies” explanation of why CUDA is such an insurmountable moat for them?

Like, what is it about that software that AMD can’t produce for their own hardware, or for a most important subset, with these $1T market stakes?

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#37

Post by symfrog »

softwaredoug wrote: post #20
tucnak wrote: post #2

They always say it's about "AI," but it never turns out to be about AI. I wonder what's it about this time?

Every tech company assumed they would be the benefactors, not victims, of AI. And investors now see that without the alleged AI growth, these companies at best look like stable utilities, not high growth stocks. At worse companies look like they make highly replaceable software as software stops being a moat. Moreover they look like large, inefficient organizations with a lot of human veto points that prevent innovat…

Was software ever a moat? Software typically only gave companies a small window of opportunity to turn a fleeting software advantage into a more resilient moat (network effects, switching costs etc.)

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#38

Post by DaedalusII »

koakuma-chan wrote: post #31
DaedalusII wrote: post #6

Earlier quoted context omitted.

wall street analysts are starting to realise that software companies shouldnt trade on a P/E of 300. DocuSign is currently valued at 30 times its annual earnings. Adobe is currently 16. Amazon is 28 -- has been as high as 50 recently. NVDA is 44. Investors are basically starting to realise that enterprise are not going to subscribe to software like DocuSign for 50 years. They'll probably just move to odoo or zohosign…

Why would you put more money into Nvidia or Tesla right now? Don't you think they are priced in already?

we are only examining the valuation metrics here, not comparing the companies themselves as investments.

you could decide that if you are a very large company, building software internally to replace a SaaS product is a path forward. Or replacing a premium software like DocuSign with a cheap one like Zoho sign. or just building your own proprietary electronic signature app

It is however impractical for big company to start manufacturing cars or designing competitive GPUs

so the earnings of tesla and nvidia is theoretically more 'stable' than a software application company like salesforce, adobe, etc.

this analysis ignores both the size of the company, and what it does, or whether or not any one of them is a good investment

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#39

Post by falloutx »

simonw wrote: post #24
goalieca wrote: post #17

Earlier quoted context omitted.

You’ll get downvoted for your second statement. I think investors are struggling to see how AI turns into more money for consumers if it. It’s one thing to exclaim how your productivity is up, but does that translate into more profit and larger customer base if you’re a business? I very much doubt consumers will pay more than dollars a month for an LLM and I also very much doubt the ad market can grow large enough to…

Many people are spending significantly more time every day engaging with AI chatbots than they spend engaging with Google, and Google is one of the most valuable companies in the world.

By that exact logic Tiktok should be the most valuable company on the world, yet its not even in top 10. Attention doesn't automatically generate profit especially since most of these companies are yet to monetize attention. They are still burning billions and the public opinion on this outside of tech bubble is very negative. It wouldn't surprise me if the money on the internet falls to pre-2020 levels in next few years. Subscription pricing model is also becoming increasingly cumbersome for companies and individuals which is another worrying trend.

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#40

Post by ivan_gammel »

mekdoonggi wrote: post #30
mbreese wrote: post #28

Earlier quoted context omitted.

This makes me wonder if Amazon the retailer requires having access to AWS services “at cost” in order to be profitable. If AWS was spun out completely, would Amazon proper be able to afford their AWS bill of AWS had a profit margin on it. I’m sure Amazon.com would be fine, but it would take a chunk out of their margins. I’m also sure that their X% ownership of the spun out AWS would cover the difference.

Consider the reverse. If AWS didn't have a large guaranteed customer in the form of Amazon, would they still be able to develop their products with perfect knowledge of the needs?

If AWS becomes a separate business now, they may be able to build better products, given a bit less focus on one large customer (Idk if Amazon.com has any priority in their product roadmaps now)
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