Yahoo Finance Amazon has become one of the most boring stories in tech: Morning Brief
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Pardon me while I wake up from a snooze triggered by thinking about Amazon Prime Day this week.
The whole annual spending ordeal came and went with little fanfare. And I think that says a lot about Amazon (AMZN) and the broader tech industry at the moment.
Adobe Analytics said that across both days, $12.7 billion was spent online in the US — representing 6.1% growth year over year. Amazon put out a press release using the word "ever" two times in the headline (a pet peeve of this journalist) to hype up its performance.
All in all, people spent money this week. Amazon probably gained some new Prime members, which will open the door for them to spend more money on Amazon this holiday season.
Great.
But who cares about Prime Day when it's stacked up against a game-changing year for tech? I mean, really.
Nvidia (NVDA) is pushing the AI revolution forward with its powerful new chips. AMD (AMD) CEO Dr. Lisa Su blew me away when she described what's next with her company's own generative AI chips.
Then we have Microsoft (MSFT) and Google (GOOG, GOOGL) going head to head on AI product releases. Did I mention Microsoft is about to own Call of Duty maker Activision Blizzard? Huge deal. Broadcom (AVGO) also moved closer this week to securing its deal for VMWare (VMW). Huge deal.
ChatGPT continues to capture everyone's attention.
And Meta Platforms (META) is powering ahead with AI while also stealing millions of users from Elon Musk's Twitter. I was impressed by what Meta is working on when chatting with top exec Nicola Mendelsohn at Cannes.
Meanwhile, Apple's (AAPL) new $1,000 plus AR/VR goggles could usher in a new wave of human interaction. And the company is now worth over $3 trillion.
Yet, we have Amazon Prime Day in the summer.
"Yes, Amazon has become boring in the tech space because while their core business is good (obviously) they aren't innovating the way we’re used to," Sevens Report Research founder Tom Essaye quipped to me via email. Tom is right.
What was the last big innovation you have seen from Amazon? Alexa?
It's certainly not the consumer-facing website, which increasingly looks like an overrun flea market.
What's the deal with Whole Foods? I am an avid shopper and love the fish department. But I go in there and leave every single time thinking how Amazon has basically done nothing to reinvent this brand and the industry with a major innovation.
Under CEO Andy Jassy, all investors have been rewarded with are headlines on layoffs and less-than-amazing top- and bottom-line growth.
The stock price has lagged too — shares are down about 17% compared to a gain of around 9% for the Nasdaq since Jassy started in early July 2021. Over the last five years, Amazon stock is trailing the Nasdaq by over 30 percentage points.
Now, none of this is to say that boring can't be wildly profitable for Amazon. The company's web services cloud business will get its fair share of business as workloads powered by AI tools demand more capacity.
"We are likely on the precipice of an explosion in AI workload growth in the 2H as GPU capacity comes online, with incremental workload growth here more than offsetting the workloads that have been taken out of the system through the current rationalization cycle," Deutsche Bank's Lee Horowitz said in a recent note. "Importantly, our checks here leave us confident that AWS will accrue more than its fair share of these workloads/dollars, supporting meaningful revenue growth reacceleration into 2024."
Point well taken.
But to really get Amazon's stock and brand back in sizzling territory — where its peers reside — the company's culture of innovation has to resurface.
"Bottom line, they haven't innovated recently the way we're used to," Essaye said.
And this innovation needs to show up not just internally, but externally for consumers and investors to see.
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