00:00 Julie
I mean, I’m getting tired of saying the CAPEX number was higher than we expected, Rohid. Like you guys all on the street, I guess you just do you just have to raise all your cap X forecast at least a quarter or even a half, right? going forward? Is that what needs to happen?
00:20 Rohit
Yeah, I think uh this this entire cycle of um surprises of, okay, capex is higher than expected, has been going on for far too uh long as in I think uh the companies also are putting the uh the next kind of uh threshold slightly ahead of what the street was expecting. So that that environment of negative surprises and and for a company like Amazon that has just far too many surfaces of risk, um be it commerce, cloud, ads, and so many other parts of the business, that creates a series of yellow flags if you will. I think but you’re spot on Julie, I think uh this um we all sell side analysts just should just decide that put the capex number so high. So next time all we need to do is lower those numbers. Uh but that’s uh in all seriousness, I think uh what Amazon is doing is investing from a position of strength and we we like it. Uh we think uh you just need to be patient to appreciate this GNA winner in my opinion.
01:54 Julie
And in the case of Amazon, what, you know, ROI is like the mantra right now, return on investment. So in the case of Amazon, walk me through what that looks like.
02:11 Rohit
Uh return on investment should ideally show up in all three parts of the business. Right now, uh the return on investment is showing up in the cloud, AWS side where last three quarters, uh growth rate has gone from mid teens to almost mid 20% and we we see the next couple of quarters that mid 20% growth rate to probably go even higher, uh given what CAPEX has done. So, uh that checks the box very well. That’s in line with what uh Google has demonstrated recently. So we like that. But remember, Amazon is one of the world’s largest retailers, one of the world’s largest uh ad companies and media companies. So I think for that, uh to demonstrate some accelerating growth or some direct linear ROI probably takes more time and more money and that’s where this $200 billion CAPEX number comes in that it’s a much bigger business, much more diversified business, and hence more uh money and more time is required. Um so to to get get to your question directly, Julie, I think you know, we need e-commerce growth to go solid double digits. It’s been between 8 and 11% uh over the last uh year, year and a half. If AI is actually demonstrating ROI for Amazon, I think we need e-commerce and ads both to grow solid double digits.
04:14 Julie
Well, what does AI do for the e-commerce side really at this point, Rohit? And and how much can it do if consumers, particularly lower end consumers are challenged.
04:31 Rohit
Uh I think, I think the way we see AI help uh large companies like Amazon uh in the e-commerce side is, again, you may or may not have used their AI chatbot called as Rufus. Uh, there is, there’s that, um, uh, that can help people find the product that they’re looking for, uh, a lot quicker than what otherwise you would have had to search through, sort through, filter through a whole bunch of search results. So that conversion from a discovery to actually finding to checking out a product, that entire funnel that Amazon has over the last 10 years very fine tuned to a normal checkout flow, AI can make it a lot faster. So, again, we are, I believe we’re in a very early inning with uh that manifesting in Amazon’s numbers, but the way it would manifest is more units sold. So, for example, in Q4, the number of units sold were uh accelerated a slight a slight bit. I mean, they they sell millions of units every day and so that acceleration is is commendable, but we need more. So I think those uh results, those kinds of tidbits in the next couple of quarters will give people confidence that, hey, you’re spending AI on AI and it’s showing in places that actually matter like commerce and ads.
06:21 Julie
Rohit, going to leave it there. Thank you so much for joining us. Really appreciate it.
06:25 Rohit
Thank you.
