Here are the takeaways from today’s Morning Brief, which you can register to receive every morning in your mailbox accompanied by:
At the start of the new year, Amazon (AMZN) employees will be required to work from their offices five days a week, reinforcing a rule allowing some work from home in a bid to revitalize company culture – and cement CEO Andy Jassy’s broader shift toward restructuring and the tightness of the belt.
Amazon CEO Jeff Bezos’ successor sees strengthening internal culture as a top priority.
“We want to operate like the biggest startup in the world” he wrote in a memo to employees earlier this month. For years, he worked to improve Everything Store’s cost structure and operating margins. And beyond its operations, the company faces other challenges, from new discount retailers to the nagging perception that it is behind the times in the field. AI arms race.
But this last obstacle may already have been overcome.
Analysts say Amazon’s cloud business, AWS, has invested massively enough to catch up with the first arrival in the sector, Microsoft (MSFT), that its position could even be advantageous. Amazon’s ability to deploy its own chips within its data centers – at a fraction of the cost of Nvidia’s – is key.
Amazon, some analysts say, has a head start on its competitors on two fronts: first over Microsoft, which was hit with a rare downgrade earlier this week for relying too heavily on Nvidia (NVDA) AI infrastructure. Or as Gil Luria, CEO of DA Davidson, told Yahoo Finance: “Microsoft is so dependent on Nvidia that it is almost transferring wealth from its own shareholders to Nvidia shareholders.” »
Jassy also appears to have an answer to recent grumblings about investment returns as tech giants pour tens of billions of dollars into AI capital spending. Amazon expects AI to generate tens of billions of dollars for its cloud business in the coming years.
Of course, it’s still too early to tell whether something like “AI chip sovereignty,” the fancy word for vertical integration, will be a key factor in monetizing AI tools or whether to knock Nvidia into the battle for chips will be very useful. Amazon is taking a more “all are welcome” marketplace approach to large language models, giving customers a range of advanced models to choose from instead of selling a single proprietary offering.
Some on Wall Street see another short-term advantage over another rival: Google. Pinched by the potential threat of ChatGPT disrupting a search-based business model, as well as strengthened antitrust enforcement on search practices, Google carries short-term risks that make Amazon look more attractive.
Amazon’s stock is up nearly 30% this year. Among its peers of the “Magnificent Seven”, only the meteoric rise of Nvidia and that of Meta (META) recovery outperformed.
The company is would have unveiled a new Alexa with AI from next month. Another positive shock in Amazon’s AI story could be the most powerful cultural shift ever.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on @hshaban.
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