Probably in some ways, but it’s not going to be the growth monster it was. Any growth they have in the near term will likely come from costly acquisitions that don’t actually produce positive ROI, but may have the appearance of growing the revenue portion of their income statement.
- AWS has been Amazon’s bread and butter, and was an amazing investment. But the growth we’ve seen from AWS that has largely driven the stock price in recent years is not going to keep going up forever. There is increasing competition in this space which is reducing pricing power, and at the same time, there is slowing demand for add on web services. God forbid if cloud demand ever goes negative… We’ve seen sequentially slowing AWS growth, and this is likely to continue at a slower and slower pace (wall street loves to value stuff on linear growth models).
- Another point worth noting on AWS is that we need to consider the VC and unicorn space here. There is a significant amount of $ that is going to AWS and other cloud services coming from non-profitable companies. Not saying it’s the majority by any means, but if / when unicorns are forced to cut costs and scale back (or fold), AWS revenue is going to lose some $ here. AWS has been a secular growth story, but even secular growth can be a victim to economic cycles.
- Walmart and other companies are starting to successfully eat into Amazon’s ecommerce operation, which really isn’t their cash cow in the first place, but this is still forcing more price pressures and causing some people to re-evaluate their amazon prime membership when they can buy shit with the same free shipping and same prices without having to pay for a yearly prime membership.
- Grocery has not been a great investment for Amazon at this point. Obviously, TBD on the long term here, but for now, it’s probably more of a negative than a positive.
- To me, it seems like every major tech company these days with extra money they don’t know what to do with is turning to streaming media as a place to put their $. I think this is a bit foolish, streaming media is a low ROI business, and it’s becoming way oversaturated at this point. It’s great as a consumer, and I get the value-add for keeping people on prime memberships, but it just seems like a good way to burn lots of $ more than anything else right now. Classic herd mentality in the tech space IMO.
- Politics are not going to be in favor of Amazon going forward. This is bipartisan, where both Trump and Warren are somewhat anti-Bezos (for different reasons). I’m not investing on this alone, but I certainly am not discounting the impacts of politics on a company like Amazon right now.