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You're listening to Bloomberg Business Week with Karl Messer and Tim Stenebek on Bloomberg Radio. Taking a look at shares of Amazon. They are higher right now by five percent. This after the company reported net sales for the first fourth quarter of one hundred and eighty one point five billion dollars to one hundred and eighty eight point five billion dollars and says they're seeing operating and income in a range of sixteen billion to twenty billion dollars. That
estimate was for seventeen point four nine billion dollars. Net sales online up seven point two percent year over year, physical store net sales up five point four percent year over year, AWS net sales nineteen percent year over year increase. The coming in at twenty seven point four to five billion dollars, pretty much in line with estimates at twenty seven point four to nine billion dollars. Let's see what James Chalkmak has to say about all this and more.
He's partner and tech analysts to Clockwise Capital. He joins us from Miami today. James, I do want to start with Amazon, and then we're gonna get to what happened a little earlier in the week with Microsoft and Alphabet. What are your thoughts of Amazon at first blush.
Yeah, I think it's just atory of what Andy Jassey has laid out basically about a year ago, that the path of profitability on the retail side of the business will continue and continue in a in a bigger and bigger way as as they achieve the efficiencies across their fulfillment network and and UH and and further optimized for for shorter duration delivery time. So I think you're seeing
what you want to see on the bottom line. The top line continues to perform more of on a status quo basis, So you know, we continue to like the name and UH and pretty pretty pleased with the court.
I know that the results just came in minutes ago. But you know, one big theme that we were looking at just more broadly this week is whether these big tech companies are seeing the results in their earnings from all of the capex that they've done on AI. What does this Amazon earnings tell us about whether Amazon is able to kind of show all of the investments the fruit of their investments.
Yeah, I haven't gone through it with a fine tooth come to change the NSSS kind of.
The returns this quarter.
But I think that from a bigger picture perspective, you know, you're not going to see a lot of trickle down to the bottom end or accretion to revenue on a short term basis. I think that these are much longer term investment cycles that will bear fruit over a longer term. So you know, that is a question that comes up repeatedly with investors. You know, where's ROI you're spending all this cappex But I think it just helps reinforce the
competitive modes and UH and crew over time. UH the what the way that we're looking at big tech more broadly is that you know, a lot of these names have run up.
You know, we've been rotating out.
Of these names for the last couple of weeks now, rotating into smaller cap names, more value oriented names, because you know, you have expanded multiples, high expectations, as you saw with Microsoft Meta.
You know, I think the correction today.
Helped Amazon to a certain extent that the expect the bar had been lowered.
But I think that big tech.
Should, uh should likely remain choppy, at least for the interim as we you know, have uncertainties around geopolitics, the election, and just the sovereign debt situation.
So let's let's zoom out a little bit and and talk specific about AWS because this is the number that you know, everybody cares about. It was pretty amazing to see net sales up nineteen percent.
Year over year.
We heard from Alphabet earlier this week in Google Cloud. We also heard from Microsoft with Azure yesterday, Amazon with AWS. James, they're the company that started at all. What's their competitive advantage? How do they continue to win business or compete against the second and third place Azure and Alphabet? How do they maintain their position when there is so much competition out there?
Yeah, I think it's going to be more of a rising time lifts all boat situation. You know, obviously is the number one scale player in the space, and all companies that are looking to the cloud, you know, will utilize them in some capacity. I think that the spend over AI and the shift from analog to digital will only get stronger and get faster, So all three of these companies will benefit.
It's really for us, it's around what are the.
Expectations around those growth rates and are those reasonable, Like, for example, with Amazon throughout the course of this year, you know, we were expecting that that growth rate to keep notching up.
Toward the twenty percent number, which it has.
So so long as you know the growth rates from an investment standpoint, are you know the bars are achievable.
We think that, you know, as you look into the medium.
And longer term, all three will benefit from it. But as far as you know Amazon specific competitive advantages, obviously they're they're the biggest player. They continue to iterate and provide more and more services more once stops shop solutions, so they're going to have an edge there. Obviously Microsoft
and Google are not standing still. But you know, I think for us, it's as long as the overall industry trends toward CAPEC spend and the cloud spend continue to move in the right directions on a secular basis, then all three should be fine.
We've spoke to a number of guests. We've spoken to a number of guests today about the mag seven and whether this is a time to hold or to buy the mag seven or to kind of play tech and AI in different names. What do you think when you're looking at you know how to play the mag seven.
Yeah, we think that it's it's good to be there. For us, it's a question of what size.
You know, these companies were our top weights, you know, a couple of quarters ago, five seven percent weights in the portfolio, you know, but now we've trimmed those back between two and four and we've all been we've exited Google for example, we no longer hold that, and you know which much smaller in Tesla, much smaller in Amazon Microsoft.
So for us, you.
Know, the trends continue to be the friend of these companies, but given how much they run, we think that you hold them, but just at lower weights and reallocate that to areas that have more opportunity.
Like we like software for example. You know, we.
Established positions some time ago and new Tanic's get lab and data.
Do you know we think those could do well.
You look at Confluence results today and last night and the stocks performance today. You know, we think that there's a lot of opportunity there. You know, we're going into value names at the same time. We like the commodities. You know, we're not sure that the inflation trade is off the table.
That's interesting, Yeah, I see alca in here.
Yeah, we have al CoA US Steel we think to be a real winner. You know. We also like gold, you.
Know, so we are you know, we're betting on that and value names like we added General Motors for example, So I would think that that could be a great stock for as we look into twenty twenty five.
Okay, we think that there's a lot of money. You'll hear a lot.
Of opportunity, but you just got to be just you just got to have Sizing is so important in this market because the magnitude of the moves and the speed of the moves is only getting faster and becoming larger and larger. Well, I want to everything that petfolio sizing is so critical.
I do want to remind everyone that we're talking to you, James Chockmock before we've heard from the Amazon colon. As we continue to await earnings from Apple, which we expect at four thirty, I do want to take this time to have you look back to what happened earlier this week and talk a little bit about Meta Platforms and Microsoft as well, which are both hold in your time. ETF Meta Platforms shares today ended up lower on the day after the company reported yesterday they felt four percent.
We're speaking to you Thursday afternoon. What what did you make of the investor reaction to Meta's results.
Yeah, I think Meta and Microsoft or a tale too different stories. I think with Meta you have a situation where the capex expectations, uh, you know, we're expected to come down.
They didn't. You know.
Now there's more and more question marks about where twenty five cappex is, you know from our perspective.
You know, for us, we were thinking heading into the quarter, you know, how short sighted will or how.
What kind of a duration of guidance is Meta likely to give on the capex side, and you know they came out with the conservative number for the fourth quarter and kind of conservative out look for twenty twenty five.
Yeah.
Our thinking is that in twenty twenty five that capex expectation number will come down and for free cash flow will will sarge as a result. So I think it was more of a management of expectations on Meta's part. But I think you know, you had the year of efficiency with Meta, was it last year? And then I think you can have the year of cash flow with Meta next year?
Okay, So you talked to Meta. I do want to get your thoughts on Microsoft as well. Shares of Microsoft today close lower after that disappointing outlook, down six percent. Again, speaking to you Thursday afternoon, there's a sort of a change of heart, or maybe it was solidified after the call late yesterday Wall Street Time. What do you think happened with Microsoft this quarter and looking forward.
To Yeah, from our perspective, Microsoft is kind of the worst report of last night. You know, that outlook, given the valuation that Microsoft's at, that outlook left much to be desired, put into question the growth rate for the agreg good business and and given where the valuation is, you know, we we'd want to lean more into the lower valuation names like a Meta, like an Amazon that
continues to get cheaper and cheaper. But you know, Microsoft, we kind of let it ride last night, and but they disappointed, and you know, we think that there's more questions than answers following that forward outlook.
All right, James, we're gonna have to leave it there. James Chock mak Uh He is over at Clockwise Capital. He's a partner in technology analyst, joining us from Miami this afternoon. All right, switching gears a little bit. It's Halloween.
Here's what's gonna happen tonight. I'm gonna rush home, do some trick or treating with the kids, and as soon as they go to bed, I'm gonna sort of take a lot of their candy and on its way to the trash can, it's going to stop in this special pile that's for me and my wife, and we're gonna sort of, you know, say, we'll have a couple of pieces of this candy and then throw the rest away. Twenty minutes later, I'm gonna still be eating candy, you know, because that's how it goes.
My dad was a dentist, and he wasn't even that strict. He's still a dentist, but when I was a kid on Halloween, he was not, you know, taking away the candy on Halloween. Halloween was like an exception.
To the rule.
Maybe don't remember. My kids are so young, they're not even gonna know tomorrow, I promise. How do we stay healthy though around the holidays, because after Halloween you got Thanksgiving, then you got Christmas and the December holidays then New Year's it's kind of hard. When the weather is cold, we go to doctor Julia Wolfson. She's Associate Professor in the International Health Department at the Johns Hopkins Bloomberg School of Public Health. It is supported by Michael R. Bloomberg,
founder of Bloomberg LP and Bloomberg Philanthropies. Doctor Wolfson am, I just like a mean dad taking away the kids candy.
Hi, nice to be with you, And no I would now say you're being a mean dad. I'd say you're
being a smart dad and a good dad. You correctly point out, you know, Halloween is kind of the start of this really indulgent holiday season, and Halloween is kind of the you know for kids, like, that's it, right, they get such a huge hall of candy and you get to indulge for that one day, and I think that's great, but smart to kind of take it away and maybe exercise some of that same approach for yourself and your wife and you have your few treats and then you kind of get rid of the rest of
that pile as well.
Okay, but here's something different that I've only come to realize in the last few years. And maybe I'm just maybe my head was in the sand, But this stuff is like a lot worse for us than we thought.
Yeah yeah, yeah, So I mean candy. I feel like we've known for a long time candy is not great
for us. It's very sugary, you know, but it's kind of one piece of a big puzzle of a food environment and sort of a food system that gives us a lot of stuff that's really not good for us the majority of If you think about what's on a grocery store shelves and all the candy, all the junk food, all those kind of really highly processed products, it makes it really hard to eat healthy, and especially you know around the holidays when we have you know, you know,
all the Halloween folly and Thanksgiving fall, the Christmas news, all the parties, all of that, and so it's really difficult and it's really bad for us. You know, we have a really growing body of evidence that our diet is really important for our health over the short and long term, tracking from childhood into adulthood. And we have growing rates of diet related diseases like hypertension, diabetes, cardiovascular disease that are the leading the cause of death among Americans and growing.
So, doctor Wolfson, how are we supposed to understand what foods to avoid and what is okay Because a lot of people talk about the dangers of processed foods, but what does that really mean? How can consumers kind of understand like what's bad processed and what's simply okay to eat and maybe just you know, manufactured but not the bad kind of processed.
Yeah, yeah, it's a good point. It's really difficult, and it's really confusing because we have you know, tens of thousands of food products everywhere, you know, just on the grocery store, in restaurants and all kinds of stores staring
us in the face, and it is really hard to navigate. So, you know, ultra processed foods are i'd say, kind of the right now where we focus a lot of attention because they're particularly bad in a lot of ways because they are those formulations of foods and beverages that are really made from food products with a lot of additives to enhance taste and texture and appearance and make them especially tasty for us and easy to eat and quick to prepare. But they don't really have a lot of
whole food in them. So I'd say a kind of a rule of thumb is where you're looking at a product and you see a list of ingredients that has a lot of words that you're like, I don't know what these words are. These are not ingredients that I'm familiar with or that I would use in my home. Pitchin. That's probably a sign that this is an industrially processed food that is something that should be avoided or eaten
in moderation. In contrast, they're but they're not all bad, right, So some things like if you think about whole wheat bread on a groy sliced whole wheat bread, that's also a highly processed but it has some nutritional qualities like it's made with whole grains, and it's perhaps like on a spectrum less bad. So I think, you know, you've got to kind of read that food label, look that ingredient list. When you see a lot of things that you don't know what they are and would never use
or cook with them yourself, that's a sign. And then compare that with the nutritional content, looking for is there a lot of sodium, is there a lot of sugar, what's the fiber content, what's the protein content? You know, do we have any whole foods at all? Here? And make some judgments in that respect. But these foods are everywhere and we all use them a lot. They're really hard to avoid full stop.
What is the I guess what is the recommended way to talk to children about eating healthy? Because Tim mentioned Halloween and kids, do you completely restrict candy? How can you kind of teach kids that diet is really all about balance, but there are foods that you should be avoiding more.
Than others without giving the kids a complex too, right, And.
That then finally when you're away, they go crazy because they think that they are not allowed to have it.
Right.
I think you know, it's all like you use the word balance, right, It's all about balance. It's all about everything in moderation. It's all about mindful eating and listening to your body. So we you know, food is not just a source of nutrients or something that's good for our health or bad for our health. Food is, you know, part of our culture. It's part of traditions, it's part of joy and love. It's how we celebrate as a family.
It's how we celebrate most of our holidays. So we want kids to grow up understanding that and loving and enjoying food and getting to have treats, you know, but everything in moderation, So thinking about, you know what, having conversations about like what is food that makes me feel good? What is this a real food? Is this a food
that like grow? Is this an apple or a carrot that like actually grows, you know, from a farm, or is this something that was made in a factory or something you know, thinking having them really engage with like what are these things? And how do I feel when I eat them? Do I get to gorge myself on candy and Halloween and then have a tummy ach the
next day? Maybe they do, and that's not the worst thing in the world, and they learn that lesson for daily life where I'm not going to then, you know, go off and gorge myself on candy all the time and feel bad. So I think it really is about this balance everything a moderation and for adults too, thinking about your diet holistically. Can we go out to a holiday party or restaurant indulge, Sure, but then we want to think about how we're eating the rest of the week as well.
Doctor Julia Wolfson, Associate Professor in the International Health Department of the Johns Hopkins Bloomberg School of Public Health, supported by Michael R. Bloomberg