The article discusses the recent lawsuit filed by the Federal Trade Commission (FTC) against Amazon. The FTC alleges that Amazon enrolled consumers into Amazon Prime without their consent and made it difficult for them to cancel their subscriptions. The FTC claims that Amazon used manipulative user-interface designs known as "dark patterns" to trick consumers into signing up for Prime and made the cancellation process complex and confusing. The article argues that while there may be validity to the FTC's complaints, the overall value proposition of Prime seems positive for consumers. It also highlights the trade-offs involved in the removal of friction in e-commerce and questions the FTC's approach to regulating big tech companies.
### Summary
The author discusses two major trends that are driving Amazon's success: fulfillment & delivery and artificial intelligence.
### Facts
- Amazon's dominance in e-commerce and delivery is causing difficulties for retailers and traditional delivery services.
- Amazon is outgrowing its major retail and delivery competitors in terms of revenue growth.
- Amazon's AI capabilities are built around a massive database of supplier/consumer/product linkages, allowing for various applications such as supply chain optimization and fraud prevention.
- Amazon's actual performance compared to its peers suggests a positive outlook for shareholders.
- Amazon's financials show increasing revenue, gross profit, operating income, net income, and operating cash flow, as well as improving gross profit margin and operating margin.
- The biggest risk for Amazon is potential scrutiny from antitrust enforcers.
Analysts suggest that Wall Street is underestimating Amazon's stock due to the company's improved e-commerce fulfillment capabilities and potential for margin growth, as well as its resilient Amazon Web Services cloud business.
Amazon's core value proposition of low prices, quick delivery, and a wide selection of merchandise, along with its investments in its distribution network and advertising business, are expected to drive its future earnings growth and make it a formidable force in the online retail and digital ad industries.
Amazon stock gained 3.5% and is approaching a buy point, with a 69% increase this year to outpace the Nasdaq and S&P 500, making it one of the top stocks in the Magnificent 7.
Amazon Prime Video collaborated with its Computer Vision Machine Learning team in Tel Aviv to enhance its coverage of "Thursday Night Football," introducing AI-powered defensive alerts that identify potential pass rushers in real-time using Next Gen Stats. The feature provides viewers with a better understanding of the quarterback's perspective and is part of Amazon's efforts to utilize technology, machine learning, and analytics to improve the fan experience.
Amazon's efforts to improve profitability have been praised, with its stock potentially seeing further upside if its North American retail business continues to become more profitable, according to a research note from Morgan Stanley.
Amazon Prime Video will introduce ads and a higher-priced ad-free tier in 2024, following a slowdown in subscriber growth since the pandemic and following in the footsteps of streaming rivals Netflix and Walt Disney.
Amazon.com stock rose 0.6% after announcing its investment of up to $4 billion in Anthropic, an artificial intelligence firm.
Amazon.com's stock edged higher during its Prime Day sales event, with the growth outlook for its Amazon Web Services division being the key factor for sustained upward movement.
Amazon is working to regain sustained growth and profitability after a period of decline, but it is also facing a major legal battle with the U.S. government and potential antitrust scrutiny overseas. Additionally, the company is focusing on generative artificial intelligence and preparing for a busy holiday shopping season.
Amazon.com's current trading price of US$133 is considered to be fairly valued according to a valuation model, but with the potential for high growth and cash flow in the future, there may be a prime buying opportunity if the share price drops below its fair value.
Amazon is well positioned to benefit from AI due to its extensive use of AI technology, its optionality for developing new AI products, and its affordable stock price.
Amazon is expected to report Q3 revenues of $142.34 billion, a 12% year-over-year increase, with Q4 sales estimated at $174.13 billion, according to Monness' Brian White, who maintains a Buy rating and a $170 price target on the stock.
Amazon is expected to benefit from the strength in its cloud and advertising businesses, cost-cutting measures, and strong momentum in e-commerce as it reports its third-quarter financials, with analysts remaining bullish on the stock.
Amazon reported better-than-expected Q3 earnings, with its shares surging as CEO Andy Jassy highlights the huge opportunity AI presents for the company's cloud business, Amazon Web Services (AWS), in a market worth "tens of billions."
Tech investors are pleased with Amazon's strong earnings and stable personal consumption expenditure inflation rate, while the broader stock market is weighed down by disappointing results from Ford and oil giants Exxon Mobil and Chevron.
