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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

#51

Post by ottah »

blinding-streak wrote: post #7

Question: does Amazon's retail business matter for analysts at all? It drives the majority of revenue for the company but a much, much smaller amount of profit. Does Wall Street care about Amazon's core business one iota?

Growth is all that matters. There is perceived to be much less potential growth in retail than there is in tech. You have to remember, most people literally think of computers in magical terms, and what's possible is usually more anchored by what they see in movies than what they experience in real life. So believing that Sam Altman is going to manage to capture all economic output of labor is seen as a realistic belief. Believing that Amazon will replace all retail in the world is obviously never going to happen.

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

#53

Post by symfrog »

tonyedgecombe wrote: post #47
symfrog wrote: post #37

Earlier quoted context omitted.

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.)

Windows was a moat but it looks more like an anchor now.

Windows' moat was not the operating system code, but that they were able to get distribution via IBM, and then grow an ecosystem of applications that were targeted at Windows, which created a snowball effect for further applications.

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

#54

Post by goalieca »

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.

I suppose people don’t realize how much of their day is actually engaging with Google through their trackers, their email, their phones, YouTube, etc.

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

#55

Post by AnimalMuppet »

DaedalusII wrote: post #46
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".

youre right, i should say tech company. but at least my flawed epistemology reveals my humanity although one could argue disingenuously that nvda is a software company because the product they ultimately manufacture is a bunch of blueprints they email to tsmc or samsung who then actually make the chips

> but at least my flawed epistemology reveals my humanity

Plenty of AIs have flawed epistemology. But nice try.

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

#56

Post by DaedalusII »

dd8601fn wrote: post #36
ecshafer wrote: post #22

Earlier quoted context omitted.

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?

the first problem is a whole generation of people learned to code ai applications by fiddling around with the gpu in their gaming pc 10 years ago. so an entire generation of talent grew up with cuda

the second problem is that so many libraries and existing software is cuda only. even some obscure hardware stuff. i discovered the hard way that some AMD thinkpads dont support thunderbolt transfer speeds on their usb-c ports, whereas nvidia ones do

the third problem is that the cost to develop a cuda equivalent is so great that its cheaper for companies like google to make TPU and amazon to make Trainium. its literally cheaper to make an entire new chipset than it is to fix AMd. i dont see companies like apple/amzn/goog etc fixing AMDs chips

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

#57

Post by AnimalMuppet »

mullingitover wrote: post #4
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?

The collapse of the yen carry trade.

Not saying you're wrong, necessarily, but as I type this the Dow is at 49,700. Would you expect the collapse of the yen carry trade to cause the Dow to collapse as well? Or is the Dow not high-growth enough for people to put yen-carry money into it?

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

#58

Post by softwaredoug »

symfrog wrote: post #53
tonyedgecombe wrote: post #47

Earlier quoted context omitted.

Windows was a moat but it looks more like an anchor now.

Windows' moat was not the operating system code, but that they were able to get distribution via IBM, and then grow an ecosystem of applications that were targeted at Windows, which created a snowball effect for further applications.

Yes though still it was a big barrier to build an OS.

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

#59

Post by mlyle »

bluGill wrote: post #25
mlyle wrote: post #15

Earlier quoted context omitted.

Big revenue + small margins in a stable business, IMO, is a massive liability for the bottom line; any downturn in business and that becomes big revenue + big losses. Even if cloud is making money, it can wipe a lot of that out. From the point of view of running an enterprise that lasts, though, diversification is important. Financially diversification is probably, in general, bad for EPS. But if you want to run a la…

That depends on the business. People are not going to stop eating so small margins in the grocery business isn't a negative - the revenue is mostly recurring and recession proof (some people might switch from buying meat to rice+beans, but other people are going to stop eating out and so it balances).

Just because people need a grocery store doesn't mean that you're guaranteed to make money running one.

multiplying huge revenue by a small percentage to get a big positive number

to multiplying huge revenue by a small negative percentage to get a big negative number

So that's how Kroger managed to lose billions over the last couple of quarters, or how small changes in shoplifting/shrinkage based on store makeup can cause losses to some chains, etc.

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

#60

Post by mullingitover »

AnimalMuppet wrote: post #57
mullingitover wrote: post #4

Earlier quoted context omitted.

The collapse of the yen carry trade.

Not saying you're wrong, necessarily, but as I type this the Dow is at 49,700. Would you expect the collapse of the yen carry trade to cause the Dow to collapse as well? Or is the Dow not high-growth enough for people to put yen-carry money into it?

> Would you expect the collapse of the yen carry trade to cause the Dow to collapse as well?

USD devalued ~10% last year, so some of the losses are already priced into the DJI. When you account for that and sprinkle in ~3% inflation, it has lost value despite being up ~11% in the last year.

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