Welcome back to the Joseph Carlson show.
On today's episode, we have two huge interviews to get into,
first of all, we have the OG, the best investor in the world.
Warren Buffett sitting down for an hour and he reveals many
highlights. Many thoughts on recent moves,
recent trades like buying the companies in Japan selling out
of TSM and many other subjects. I'm going to go through and
highlight what I think are the most important takeaways from
buffets interview. But then, like I said, this is a
two-for-one. We also have the CEO of Amazon,
Andy, Jesse, and a it down interview answering questions
about what's going on with Amazon.
He talks about retail business, he talks about cloud computing.
He talks about the entire media sector, he shares, many thoughts
on what's going on, and we're going to dive into all of it in
this episode. So, as always, we have a lot to
jump into, in this episode, we're going to be going over
both of those interviews. And I'm also going to be
commenting just a bit on the market today and my portfolio.
Now, having said that, let's go ahead and Jump Right In now the
passive income portfolio is a experiment.
It's an experiment and show My finances.
What I'm doing with my investments publicly over the
course of years, I started this portfolio back in 2017 and I
started showing it publicly in 2019 since then.
I've been doing weekly uploads showing what I'm doing with my
money transparently every single week.
So what you're seeing here is a continuation of a portfolio that
I share both the good and the bad I've shown when it's gone in
the red and I'll show when it goes in the green right now.
It's performing really well. The portfolio started off as As
a dividend growth portfolio. My major focus at the very
beginning was on the dividend, the yield of the dividend at the
time. Over time I've shaped my
portfolio, molded it and I've refined it to be a smaller and I
think stronger portfolio with a bigger emphasis on the
underlying economics of the companies.
I'm buying each one of them does pay a dividend currently.
So all of these companies are dividend Growers but instead of
focusing on companies that have very high yields, I'm focusing
on companies that can grow their dividends.
Quickly there's a couple standout companies in the
portfolio. Currently, Texas Roadhouse is at
eleven thousand seven hundred dollars in gains.
This company recently just hit an all-time high yesterday at
$111 per share in the consumer category we have CostCo as the
big stand out here as well. This company's done really well
over the past five years. I think it has a great future.
I'm extremely bullish on. Costco has a company in the real
estate category. Of course we have the G.
This companies pulled back a little bit in stock price over
the Last month, but I think it's still chugging along and one of
my favorite things about this company is the enormous
dividends that it pays. I can bring up my activity feed
hair and look at my recent dividends and right here on the
sixth of April. Just this month we have a
dividend payment for five hundred and ninety seven dollars
nearly $600 from a single company.
That's the biggest dividend payment that I received from any
company VG's a real estate company.
That pays very very big dividends.
I get some other healthy dividends as Also, it's not the
only one that I'm getting income from.
But VT is a big one in the tech category, of course we have
apple and Microsoft to dividend-paying Big tech
companies. I'm currently up 18 thousand,
six hundred dollars, it's been a great performer.
And the thing I like about Apple is it's not just the multiple
increasing that's not what's happening with this company.
Rather the stock is going up because a company is earning
more and more money. Microsoft is another one that
I've been recently, buying a bigger stake into as it's been
selling off, but I'm basically flat on the company.
I'm up just a couple. Thousand dollars on it.
I'm going to give that one more time.
Other notable mentions are the railroads Canadian Pacific and
Union Pacific. I bought into these companies in
2023, so they're brand-new, I think they're going to do great,
but right now, I don't have much to show.
They're basically just flat this year.
And then finally, we have the financial category.
This is another one that I bought into this year.
These companies are unique because they work in finance,
but they don't have any credit risk.
They aren't lending money. They don't operate like a bank
using debt. Instead they make money by.
Selling services, selling data and collecting fees.
And that's a business that I really think is attractive.
So these ones are brand-new as well and likewise I have nothing
to show for them so far. But I think over the next five
years I'll get really attractive returns with both of these
companies. So we'll see how this turns out
overall. That's the highlight of the
portfolio today. That's all the Holdings.
All the bets, and I'm making and I'll let you know when I
introduce new Holdings, Urban I start adding to another
position. So if you want to see real
investing, which is a parent investing with thorough
follow-ups, every single week and showing what I'm actually
doing with my money, you can follow along the channel for
free. That's what you're going to get
for year after year, after year with this channel.
Now let's go ahead and move on and we'll jump into the
interviews. We're going to start off with
Buffett. Now in this hour, long
interview, they go over a bunch of different subjects.
What I want to do is go over what I think are the most
important highlights. The biggest takeaways.
The first question that buffets asked is regarding his net sales
of banks, Buffett has been selling out a financial She'll
companies specifically banks in aggregate, over the past couple
of years. Some of the banks that you've
sold include USB Wells, Fargo Goldman Sachs, JP Morgan PNC.
Should we think that their banks that aren't run?
Well run because you sold them or no.
Okay, no. But I do think banking you get
in a lot of trouble just because of the kind of things that they
did and that I didn't like the banking business as well as I
did before. He says it pretty
straightforward there, the reason he's selling the banks is
because he thinks they can get into trouble.
And he's changed his mind a little bit.
He just doesn't like them as much as he did previously.
And that is something that Warren Buffett is very good at
now, an egotistical investor one that has a lot of pride.
A lot of ego would be unwilling to admit that they've changed
their mind on a prior investment because they would view that as
a weakness. If you change your mind, that
means that your initial research wasn't as good as it should
have. Been, if you change your mind,
that means that you didn't have a good thesis to begin with.
That's How Warren Buffett thinks he doesn't have ego.
He doesn't have pride. He has an open mind with his
current Investments. If he no longer likes them the
same way that he did when he originally bought in, he sells
them and that's something good. Investors routinely.
Do they have an open mind? They don't make decisions based
off of emotion or attachment to a company.
If their views on a company changes, they sell oftentimes
that's accompanied with the level of criticism from other
people. If you sell a company that you
once liked, you can be criticized for it.
But Buffett doesn't care about that.
He's not there to earn points from the public.
He's there to earn money. Now, the big question is he
still owns a lot of Bank of America so he's picking and
choosing hair. He's a nut seller of banks.
He's been selling off these companies over the past couple
of years, but Bank of America is his second largest holding right
behind Apple. It's still a massive position in
the Buffett portfolio. Marvin, why did you keep Bank of
America? What a they invited?
I mean, I invited Soften many years earlier and they made a
very decent deal for us. And I like Brian Moynihan
enormously and I just don't want to.
I don't want to sell it. He's a little bit Coy when asked
about why he sold all the other ones but not Bank of America.
He says that he likes Bank of America and if you caught it in
his answer, the first sentence, the first thing he went to was
that he got a pretty good deal if you recall Warren, Buffett
did not just by Bank of America. In in the open market like
everyone else, he got a preferential deal by the fact
that he has a lot of money. He has a lot of connections.
So we got a deal that the rest of us as retail investors are
not able to get. And I don't believe that Buffett
would own Bank of America today if he had to buy the company at
the price that it trades that today on the open market.
The next thing that Warren Buffett's asked about is the job
of the FED, how was the FED doing?
And how would he rate their performance?
I do not think I could run the Fed as well as shape our rules.
And I think Jay Paul's A terrific and you have to act on
insufficient information. And you've got to, you've got to
Ultimate responsibility to the American public and doesn't mean
you can stop recessions. It doesn't mean that you can't
earn battles at the good lungs or anything else.
But it does mean that you got to keep the system working and the
system came close to stopping. If you read a book called
trillion-dollar triage, you can you can get it on a day-by-day
account and people don't know how close it was and and Jay Jay
Powell did not call for studies or position papers and you know
like the debate and everything you just don't do it.
You act there's an overarching bias to not like the FED.
If you go onto social media, one of the biggest punching bags
ever is the Fed. In particular j-pal whoever's
leading the FED part of the reason that the FED is such, a
big punching bag is because what they do is affect monetary
policy and anyone likes an excuse for their stock
performance doing poorly. So what are the feds Anything
that can potentially negatively affect people stocks or their
companies by raising interest rates, who do they go?
As the punching bag, the fed. He's the one to blame, Jay Pals,
the one that caused all of this grief in reality.
When I look at JPL, he strikes me as someone that does have
integrity. That's trying to do the right
thing. He is working with incredibly
limited data at the time, lots of people judge him in hindsight
when he's making decisions in real time.
Overall I agree with Warren Buffett here now moving on
Buffy. It's asked about the overall
economy and what he's seeing and his various companies as we know
Berkshire. Hathaway is a conglomerate that
owns a lot of different companies in different sectors.
So Warren Buffett has day by day data.
You can see day by day data about how all of these companies
are doing, what the revenue looks like.
What consumer habits look like. And he's asked about his
insights on whether or not he thinks we're headed into a
recession or whether he thinks things are still going.
Well, those - 22 percent in February from a year ago.
Exactly. That was going to happen.
Sales profit and sales problems are down a lot more than that.
On the other hand, some of our businesses are still doing fine,
but they all are reporting that the new one, you know, it's
almost her living of Awesomes orders were placed months
earlier, and that sort of thing. But, but it's a tougher world
out there in a great many businesses.
Not in the insurance business people that run our businesses
that do have any sensitivity to. The economy are surprised that
we're Are they are now compared to where they thought they were
going to be six months ago. Things are slowing down a little
bit, especially with economically sensitive
businesses. Some companies are so strong and
resilient, they don't really rely on a strong economy.
Those ones are doing fine, but companies, like the railroads
companies, like companies, like, railroads and Retail companies
are slowing down a little bit. So that's something to be
expected, over the next couple of quarters, the sales and
earnings of your companies might be lower than expected.
But we can see how concerned Warren Buffett is about.
This things are slowing down. Is he's shocked and scared and
frightened, and wanting to sell out of these companies.
Let's hear his answer here. That doesn't mean the world was
coming to an end or anything. These 58 years.
I've been running Berkshire. I mean, we run into all kinds of
problems but but that's that's what business is about and we
run our business so that we don't depend on everything being
Big hunky, dory. Always, we might have saw that
we will be the last man standing and so Warren, Buffett notes
that things are slowing down, but the world's not coming to an
end. And when he's been investing for
over 60 years, he seen this over and over again, little economic
slowdowns, as we go through different Cycles.
The businesses that are the most impacted by, this are the
economically sensitive businesses.
When I look at my portfolio, those type of companies are the
Industrials. They're going to be affected by
an economic slowdown because As they move stuff, when the
economy slows down less stuff is being moved and the company
that's less economically. Sensitive is something like
Costco, a consumer defensive that sells toilet, paper and
water. So if you have an understanding
of the type of businesses you're invested in, it can help gauge
your expectations and make it. So you can whether through
different storms easier for Buffett.
He's not concerned at all about this because he says that he
shaped his company in a way where he doesn't anticipate
things to be hunky. Dory all the time.
Things have been going well with the economy.
He says he wants To be the last man standing that's how he
operates his business being the last man standing means that he
does not take risks with other people's money, he invests it
but he does not take risk and that shatters a lot of people's
perceptions because they view investing as taking risk the way
that Warren Buffett reduces risk in his portfolio is by carrying
in excess of a hundred and ten billion dollars in cash, which
is more than enough money to get through any economic slowdown.
So he's reduced risk. As much as possible in the
Berkshire portfolio. Now the next topic that they ask
about is always cryptocurrencies Bitcoin, that type of thing.
Buffett has said that cryptocurrency specifically
Bitcoin is not only rat poison which Charlie Munger coined that
term but he said that it's rat poison squared buffets no fan of
cryptocurrency. He doesn't like it, it goes
against everything that he preaches, which is investing in
things that have intrinsic value, which means that they're
productive assets and they generate in comes in and of
themselves, Bitcoin. It fit with his overall thesis
in the same way that gold doesn't.
Now, he's asked about an updated opinion on this because Bitcoin
right now is actually performing really well.
So doesn't this prove buffets opinion wrong, that's predicting
when speculation will end. You know, when the gambling
Instinct will go away and one more people want to get out and
are getting in. And I have no way of if I
thought I was good at that. I figure our way to make a lot
of money. Different things.
All I'm trying to do is buy good businesses, but I One thing I
know is I, you know, I didn't like chain letters and when I
was a kid, I thought why in the world should I send along a
chain under the next night when I could start my own?
I mean, I've seen people do stupid things all my life and I
really, I empathize with that. I mean, people like to play the
lottery, they're going to get 60 cents back on the dollar or
whatever the number maybe. And I mean, people love the
idea. They're going to make more money
tomorrow and really drives them crazy.
If their next-door neighbor is making a lot of money, not
knowing what they're doing. Are just sitting there and their
spouses saying, you know, why is that guy getting a second car?
And why are we missing this whole thing?
And the gambling, instinct is so strong.
There's a lot to break down in this, take on cryptocurrency.
He's asked about why it's gone up and he says that he can never
time when these type of things end, he just knows that
eventually something that doesn't have intrinsic value is
going to come to an end and he sees Bitcoin and cryptocurrency
as no different. It holds, no intrinsic value,
and buffets opinion. So he doesn't see it as a
worthwhile investment and he instantly after talking about
Bitcoin. He talks about how people have
done stupid things like this. Their whole life's with chain
emails as something dumb and silly to do with people that
just like to fit in, but then he instantly transitions over to
gambling in buffets mind. He doesn't see any
distinguishment. There's nothing different
between owning cryptocurrencies, and gambling in his opinion.
It's all speculation on something that doesn't Have
intrinsic value with cryptocurrency.
You're trying to time the market and outsmart other people with
gambling. You're trying to beat the odds,
where the odds are not in your favor.
He doesn't like either activity and he sees them as nearly
indistinguishable. And I share the same opinion on
this. I have never owned a Bitcoin and
aside from all the claims of how its revolutionising technology.
I have yet to see how that's really come to fruition.
When I look at Bitcoin or Salon or ether, I don't see these
being used in any meaningful capacity whatsoever.
I don't see blockchain being used in any meaningful capacity
whatsoever. Now moving on we get to a couple
more key pieces of information that Warren Buffett gives us.
The first one is the answer to the mysterious question of why
Warren Buffett's old TSM if you recall Warren Buffett excitedly
purchased a lot of TSM and then only three months later the very
next release of as 13f filing it showed that he had sold the
entire position. So a lot of investors were
wondering what happened. This is typically not Warren
Buffett does Taiwan semiconductor is one of the
best. Well, it's the best in that
field and is one of the best companies in the world.
It's a fabulous Enterprise, and Apple buys a lot of the products
from home. I mean, they, they're good and
they're coming the United States.
And we're, we're actually running maybe even building for
one of our subsidiaries helping build facilities form.
But I do think that there is a danger of their to some, and I
have any idea. There's actually a danger of
seismic in action. I mean, and where they're
located, but I re-evaluated that part of our.
I didn't reevaluate the business to management or anything of the
sort. It is a fabulous company and you
know, you re-evaluated the geopolitical risk of China
stepping in Egypt of Taiwan. Yeah, he re-evaluated the
geopolitical risk of China invading Taiwan and even though
he possesses the Ability of it to be low the consequences of an
invasion in Taiwan. It would materially adversely
impact that company to a huge degree and Warren Buffett does
not like the risk. You notice a theme here with
Buffett, everything he does is centered around.
Reducing risk. He's never trying to maximize
upside. He's never saying this is the
best bet. This is the one that's going to
double or triple. His primary focus is being
risk-adverse focusing on things that are sherbets focusing on
things that don't have. Of a percent chance of it going
into destruction. Now, this leads into the next
question. If he's avoiding TSM because of
concerns about China, invading Taiwan, then why is he still
invested in apple? What is the difference there?
If somebody, if you're an Apple user and somebody offers you ten
thousand dollars but the only provides lose you'll never be
able to take away your ass, your iPhone and you'll never be able
to buy another. You're not going to take it.
If they tell you, if you buy another Ford motor car, they'll
give you ten thousand dollars not to do that.
You'll take the time to $1000 by shall be.
Instead of it, is the hypothetical that Warren Buffett
just presented was that if you were paid ten thousand dollars,
would you accept that to never use an Apple product again?
So you get paid ten thousand dollars one time.
But the agreement is you can no longer use any Apple product for
the rest of your life. I wouldn't accept that.
I would never accept that deal. I Like too heavily on Apple
products to me, the use of the products themselves between the
MacBook and the iPhone, and the iPad, and the watch, and all the
technology that they develop all the services, they develop is
worth more than ten thousand dollars in my life.
Now there is a portion of people that would say sure I'll take
that I'll take that exchange but it's not many.
Most people want to be able to use Apple products and I'd say
the majority of Apple users in agreement with Warren Buffett
would not accept Ten thousand dollars to never be able to use
an Apple product, again, in their lifetime.
I've actually done a very similar poll except for, with
Apple, it was with Google. I made a poll on my Twitter
following that said, would you agree to never being able to use
YouTube again? If you were paid 25,000 dollars,
sixty, seven point five percent of respondents said, no, they
would turn down 25k. That is the Staggering value of
these type of companies. YouTube has so much value in
people's lives that they can't be paid.
To stop using it. Apple products have so much
value in people's lives that it's unlikely.
They would accept a large one-time payment to never be
able to use their products. Again, it's a company that makes
too many good products that too many users like using.
So this is the motive Apple. Now, if you ask the same
question about Ford, for example and say, would you accept
10-thousand dollars to never buy another Ford car?
Again, the exact same question, at Warren, Buffett asked, he is
accurate and saying that the majority of people will accept
it, they will easily move over to another car.
Facture. There's lots of good options to
choose from and they don't have the same type of attachment to
the customer that something like apple or YouTube does Buffett.
May not understand all the technology behind Apple
products, but he understands human behavior.
He understands the durable competitive advantage of
companies and you can see that at play with this simple
comparison. Now, the final question, I want
to go over is Warren Buffett being asked about Paramount,
this is a company where I have not understood the investment
thesis hair Paramount's low. Ian, I think that that's part of
it, but it doesn't really fit in with the Warren Buffett
Investments. Paramount is a streaming
business, it's much more volatile, it's highly
competitive and it's a lot of Hit and Miss based a lot of
things that Warren Buffett himself has said in the past
that he doesn't like. So why did Buffett by Paramount?
That's framing that you know, it's not really a very good
business. Let's pause right there.
First sentence out of his mouth. After being asked about
Paramount is streaming is really not a good business.
So we're off to a good start. Why did he Best in Paramount.
Well, streaming the whole company that that's just not a
good business to be in. And then over time of the made,
lots of money to shareholders. Really haven't done that rate
over time and supplied the many it's a glamorous business and
had some breads are not all, I would get o.
And they they look for pigeons show man and they find them.
I mean, it's like attracts people and meet suckers.
It's great way to meet girls, you know, for why do I but the
It isn't fundamentally that would have business.
Whether it was Distributing producing movies or and and
you've got some people that I've Got Deep Pockets that aren't
going to quit. And the product are offering
people a chance to watch all the movies, you know, for peanuts
and all that. But he's been talking for a
while now and I'm still waiting for the punchline here.
Buffett you are asked, why do you invest in Paramount?
His opening sentence was streaming is a bad business and
then he goes on for a minute, talking about Tire industry, and
how he's basically load. Some of it, it's an industry
which has embellishment and Grandeur has lots of people that
dress up, and it makes them feel good about themselves.
They themselves become rich and wealthy, but the investors so
far haven't done well in aggregate.
So are still waiting to see why Warren Buffett bought this
company so far. He's making a nice bear case
against the entire industry. Then they rarest prices will
find out but so far they haven't been able to.
They've been able to attract subscribers but they have talked
about a terrible price. All right, you give A whole lot
of reasons why not to buy Paramount.
Why did you buy it? Well, we'll see what happens.
Now, usually if Warren Buffett does not want to answer a
question directly. He gives a very vague answer, a
very non answer answer in this case he just says, we'll find
out. He doesn't answer the question.
We still don't know why he bought Paramount and were left
to our speculation. I think that this was likely a
purchase as an acquisition play. He knows that there's big time
investors trying to scoop up as many streaming.
As possible. He knows it Paramount was
trading at a very cheap price and I think that there's a
chance that Warren Buffett was thinking the company was going
to be acquired by another larger company.
Now, of course, we don't know this for sure.
He doesn't give a direct answer but that would be my guess but
that is the Buffett interview. I think a lot of insights have
come from that singular interview.
He has a strong focus on minimizing risk on remaining
financially, stable, investing in companies with solid
fundamentals, very strong free cash flows as overall focus is
always growing Berkshire without putting the investors in
Jeopardy. Now moving on from the Buffett
interview. We have another interview with
another CEO of a massive conglomerate company.
It's not technically a conglomerate but Amazon may as
well be a tech version of Berkshire, it has a series of
different businesses, all generating different amounts of
cash flow, and it runs on the edge of losing money, some
years, some years, it has massive negative cash flows and
making a lot of money other years.
But the trend right now, for Amazon is one, that's a
struggle. Amazon is losing a massive
amount of Money every single year and it's actually
staggering if you see this visualized.
I want to show you a series of three charts, three, charts to
illustrate, how big this problem is for Amazon hairs chart number
one, we've all seen this one before, this is the free cash
flow of Amazon, over time, going back to 1996, but this right
here, illustrates a problem in and of itself, but this is not
the only problem that Amazon is facing if we look at chart to
this shows the free cash flow And then alongside it the
stock-based compensation. We can see the total cost to the
shareholder as if the stock payments were done in cash like
a cash bonus. So this gives you a more
accurate picture of what the financial situation looks like.
Not only did the free cash, flows turn - in 2021 and 2022.
But the stock based compensation is exploding upwards.
It's growing at an incredibly rapid Pace.
Now, in the new version of qual, trim, we net He's out to see the
total impact on the free cash flow.
If stock-based compensation was treated like cash, I call this,
the adjusted free cash flow. This is what Amazon's adjusted
free cash flow looks like they had - thirty six point five
billion dollars of free cash flow.
If you net out the stock-based compensation - thirty six point,
five billion is the most any company has ever lost in the
history of the world. There is no other recorded loss
that big. Now, Amazon stock, as a result
Has Fallen. On precipitously over the past
two years, it's been a struggle and the CEO Andy jassy, he
hasn't had a great run in terms of stock performance.
So what he's trying to do in this interview is show the plans
of how he's going to fix this. And the first question is on
this subject, where does he see Amazon in terms of future
Investments and layoffs? I'm very optimistic but what
lies ahead for Amazon and I think there are a lot of reasons
for I'd start with just a couple of data points.
If you, if you look at our two largest businesses, if you look
in our Doors business, which our retail business.
We still only have even though it's about a four hundred thirty
four billion dollar business, we still only have about one
percent of the worldwide Market segment, share, and in retail,
and 80% of it still lives in physical stores.
And if you look in our AWS business, which is about an 85
billion, dollar Revenue run rate business about, 90% of that
Global, it spend is still on premises, not in the cloud.
So if you believe that those equations are going to flip over
time which What we do and we're seeing we have a lot more growth
in front of us. One of the biggest criticisms
that you hear about investing in large companies like apple and
Amazon, is that they're so large.
That the law of large numbers means that their growth is going
to essentially go down to nothing.
Now I'm an investor in Amazon and I've heard this same
argument continually for a long period of time.
One of the time periods where I heard the Amazon is already very
large. The growth is going to
decelerate it's going to slow down was around 2020 around this
time period right? Here, the revenue at the time,
Amazon did was around 80 billion dollars in Revenue.
Now, Amazon's revenue in the last quarter is nearing 160
billion. The retail segment is massive
and like he notes, most of retail is still physical.
It's moving online every single year.
Now, next up, you gets into the talk about the subject of the
year which is AI. That is the buzzword of the
Year. Unlike a lot of other buzzwords.
I do think there's a lot behind a II think it's real.
I think it's meaningful. I think it will have Major
impacts. So it's both a buzzword and a
very meaningful term. Amazon is big into AI.
They've, they've done this in a sense with machine learning for
a long period of time, but now they're getting directly into a,
I like many of their competitors and they launched a new service,
a new product called Amazon Bedrock.
Would they want to do, is they want to work off of a
foundational model, it's big and great already, and then have the
ability to customize it for their own purposes and that's
what Bedrock is, which we now stay, which is it'll give you
access to go. Language models, from anthropic
from stability, I from AI 21. And from ourselves, we're
externalizing. Some of our own models, we call
tighten, and then it lets you not consider models.
These are models to build software.
Yeah, they're big large language models that you can build these
generative AI experiences on top of and you just have to
fine-tune them for what specific about your application.
So that's Bedrock, which I think will change the game for people.
What Amazon is trying to accomplish here?
Ultimately is making it so that once again Developers.
An Enterprise customers have no reason to leave AWS.
They want to bring everything in house.
They want to be the solution for all technical needs.
That's Bedrock, which I think will change the game for people.
And then you know they're going to be these applications built.
On top of these large language models chat GPT is an example
that we now say is something called code whisper which is for
developers. And so if you're writing code,
instead of having to write everything and do all the art
and the science yourself, you can in a For language way, just
say what you want to do and could whisper will generate the
code for you and that will substantially change developers
productivity. Now, Amazon has a tool that
mares Microsoft's co-pilot, both of them have text to code while
Amazon is a biggest cloud provider.
They have the most customers which they can use to bundle
these products together. As I mentioned earlier, we have
been using machine learning in a very deep way and every one of
our businesses, we have our own large language models that we've
been working on for multiple years.
And that fueled out of our experiences and I think you
should expect in general. I think you should expect that
generative, AI has the chance to transform every customer
experience that. You know, we are using it
investing in a very deeply across all of our businesses and
Amazon, and then for AWS, we're going to make sure that every
other company can use it as well.
Now he's talked a little bit about the retail business.
He's talked a lot about AWS and the next thing that he's asked
about is the advertising business, which is adjacent to
retell. That's a big part of the Sizing
business. But it's not the only aspect of
the advertising business Amazon's advertising includes
both retail and sponsored listings, but it also includes
Twitch TV. It also includes Amazon Prime
video, they sell ads all over the place and this is a massive
growing business. I personally believe that
Amazon's advertising business is superior to both Google's and
metas. It is more direct than either of
those companies and the growth rates so far of the advertising
business has been staggering even when When most advertising
Focus businesses have it, I think slowed, over the last
several quarters. And a lot of that is just our
advertising is uniquely effective as we're able to, if
you think about on Amazon, when you're an Advertiser, we have
the ability with the machine learning algorithms that we've
built, and we continue spend most of our resources on that
because we understand shopping behaviors were able to when
customers search for something, we're able to place
advertisements there that are relevant to what their search
are. So MERS respond better to them,
which means they're more effective, which means
advertisers like advertising there.
So, it's, you know, most of our resource continues to be in
making those machine learning, algorithms, more targeted, and,
and more relevant for customers. I think we've done a pretty good
job with more. We can do he highlights again.
The main reason I think Amazon has the superior advertising
business when you search in a term in Amazon, they know
exactly what you're looking to buy and they can use machine
learning to prompt you with sponsored listings that are the
The perfect fit for what you're searching for.
That's the most direct form of advertising.
You can get you can compare this to both Google and meta when
you're watching a YouTube video or you're searching something on
Google search, oftentimes you're not looking to buy something.
So they're going to have to convince you to buy something.
When you're not looking to buy something when you're scrolling
through Instagram or you're scrolling through Facebook and
most cases, you're also not looking to buy something so
they're doing a lot more work to get the customer to buy
something, it requires more tracking, it requires more
effort when you go to Dot-com, you are looking to purchase
something. I think you should also remember
in our advertising business, that most of it is in our owned
and operated properties. We still have a lot of
opportunity to thoughtfully integrate advertising into our
video, into our lives Sports, into our audio products, and to
groceries. So it's still pretty early days
for us with respect what's possible and advertise you
mentioned. Now, this next part, he
addresses something that he never addressed in his letter.
In the letter, he went over the Retail business, he went over
AWS he went over Kuiper, he went over the advertising business,
but he never went over media and Harry's asked directly about
Amazon Prime video, what does Amazon trying to accomplish with
their video service? We're trying to build the best
destination and the best collection of streaming video
content, anywhere and and live sports turns out to be something
that people really like, you know, it draws a lot of people
are, you know, our Thursday Night Football had the Just
number of new Prime, customers signing up for and live.
Sports has been successful for us in Europe to with with EPL
and UEFA. So I think you can expect that
we'll do more sport but now it seems like a lot of the bigger
companies and media are going into sports.
Apple wants to own sports. Google wants to own sports.
Amazon does the same thing with Comcast and Disney?
Every Major Video content platform wants to have their
hands in sport? Except for the notable standout,
which is Netflix. Now, finally the final question
for jazz See is about the stock and the stock price.
How much does he spend of his time focusing on the stock
price? I don't spend a lot of my time
focused on the stock price, its kind of it Amazon.
Remember, I've been Amazon almost 26 years now.
So I kind of grew up here and we have always had this perspective
that you can't be 24. First of all, we tend to be
long, term, Focus. We there's that adage that in
the short term, the stock market is a voting machine in the long
term. It's a weighing machine and
weave. Really seen that over 26 years
in any one period of time. It may be, you know, further up
or further down but it really matters what you do for
customers over long periods of change.
It's the answer you would expect from any good CEO that they
don't spend all their day looking at the stock price much
better at focus on the things you have direct power over,
which is the long-term growth of the company.
So there we have, both interviews.
Let me know what you think of what they said.
And I will see you in the next one.