Buying the Outrageous Amazon Dip

🧠 Takeaways:

Amazon is betting the farm on the AI future. It’s time to get aboard.

1. They really need to divest the Retail biz from the cloud biz (they won’t).

2. Remind everyone they own 33% of Anthropic.

3. Play the long game on robots

+ Why I became a Mac Mini bro.

LBAB Community: I’m Obsessed with OpenClaw

I officially jumped on the bandwagon and bought a Mac Mini. 

I spent the week going deep on OpenClaw + setting up my own personal assistant.

This is something that I've been looking to do for three years. 

In late 2023 I tried the classic offshore EA playbook. It just never really worked. Always obvious that AI should be doing this role. 

And while OpenClaw isn’t fully there yet, if you're technical + willing to take the risks, it’s a glimpse into the future. What I've always been looking for. 

I have it doing Chief of Staff/EA tasks:

• Completely managing my calendar

• Managing my inbox + drafting replies

• Organizing our tasks in Jira (our project management tool)

• Organizing files + folders in our Google Drive

I also have it coding out some new tools for me, which you all will see very soon. 

We have some exciting content updates for you all. 

As well as building new processes + new resources to help grow the newsletter.

Basically spending all my time in OpenClaw and Claude Code/co-work. 

While it's an immense amount of setup and infrastructure required to invest today, in 6 months, we're going to be doing so many new and better things because of how productive these tools are.

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

Amazon is getting rocked after earnings. Because the market’s marketing.

• Share price: $222

• Market Cap: $2.38T

• L5 Performance: +32%

• P/E Ratio: 31x

They’re getting punished for jumping on the AI train, but when Amazon makes a ROIC move like this, they know what they’re doing.

Financial Summary

2025 Financial Statements (YoY Comparison)

Sales: $716B (+12%) 😐
Gross Profits: $356B (+14%) 😐
OPEX: $275B (+14%) 😐

Net Income: $77B (+31%) 🤤

Link to Company’s earnings

TLDR Analysis: Solid, Unsexy Growth

• Sales Growth slowing from declining product sales. 😐

• OPEX growing faster than Rev but in line with Gross Profits. 😐 

• Net Income exploding on Software growth. 🤤

This is what growing a biz the size of Saudi Arabia’s GDP is like. 

Big steady investments over a long time.

But the underlying trend is hitting the gas on all the areas that matter. 

Investing in AI to power: AWS, Ads, and Robotics. 

Weird that they’re not up when you see Alphabet, Meta and Tesla’s stock prices.

Let’s TLDR This Biz

Founding:

• Bezos quit D.E. Shaw in 1994 after seeing web usage growing 2,300%/year. Parents invested $245K.

• He told investors there was a 70% chance it would fail.

• Launched July 1995 as an online bookstore. Sold to 45 countries within two months.

The "Aha" Moment:

• Books were the wedge, not the destination. The real insight was the flywheel: lower prices → more customers → more sellers → wider selection → lower costs → repeat.

• He invited competitors onto his own platform as 3P sellers. That decision (plus Prime in 2005) turned Amazon from a retailer into a platform. 3P sellers now move 58% of all units.

Explosive Growth:

• IPO'd May 1997 at $18/share. Didn't profit until Q4 2001 ($0.01/share). Revenue: $3B (2001) → $717B (2025). Market cap: ~$2.6T.

• AWS launched quietly in 2006, now $129B/year and 57% of operating income. Advertising went from nothing to $56B+, growing 20%+/year.

The Model:

• Prime (200M+ US members, 98% retention) locks in relationships. AWS funds below-cost retail. 3P marketplace earns commissions while sellers bear inventory risk. Ads monetize purchase-intent traffic.

• Philosophy: sacrifice margins for scale, reinvest everything, accept being misunderstood.

Sideways since 2020:

• Stock: +2% (2021) Five-year CAGR: just 8.9%.

• CapEx nearly doubled to $131B in 2025, $200B planned for 2026 (AI infrastructure). 

• FCF collapsed from $38B to $11B. Management calls it a generational investment cycle. The market is dumping the stock.

Let’s Scale This Biz

Here are the 3 ways we buy the dip + ride it into the future.

1) Break out the Consumer/Retail Biz

Amazon needs to split out the retail side of the biz from the cloud computing side of the biz. 

These should be two separate trillion-dollar public companies.

Cloud + cloud community services is the most profitable unit that has a clear, separate future ahead of it. They need to break it out, make it AI-or-die + leverage it into a new robotics department.

That being said.

Advertising is the fastest growing unit + combined with fulfillment, it’s all profitable enough to support retail biz growth.

Takeaway: Cloud needs its own runway to run.

2) Everyone forgets AMZ is team Anthropic.

Everyone seems to forget that Amazon owns a THIRD of Anthropic + has deeply aligned their AWS tech stack with them. 

And as Anthropic takes over the B2B world, this is only going to push more growth to AWS.

Amazon stock has basically gone nowhere in the past 5 yrs while Microsoft’s 4X'd after investing in OpenAI.

If you look at the same system, setup, benefits of being a customer, plus using their data centers and empowering people to use the LLM inside of their tool, Amazon is obviously going to benefit 10x more from this.

I wouldn't be shocked if in the next six months, we see Anthropic drop some sort of robotics model that Amazon will test with their Kiva robots to power their infrastructure.

Takeaway: Amazon picked the AI winner.

3) Robotics is the AI future

Everyone cares way too much about LLMs + not enough about how LLMs are going to be the infrastructure for robotics.

You're sort of seeing this in the Tesla/SpaceX news as well. 

ChatGPT + Anthropic won't be the real winners of this space. 

It'll be the companies that leverage all this knowledge and information to train the robots to execute tasks in the future.

Amazon is poised better than anyone else to win massively with their robotics division for all their fulfillment. 

Now, they employ hundreds of thousands of people to operate the supply chain/logistics.

That’s the greatest cost access point. They’ll replace 90% of drivers/fulfillment workers with robots.

You're going to see a massive explosion in revenue and profits.

And it seems like they're getting completely passed over in this very obvious future over the next ten years. 

Because everyone's so excited about a Chat interface.

Takeaway: Robotics is the AI future. Not LLM.

Final Thought

It's mind-blowing that Amazon stock hasn't gone anywhere in the last five years. 

Cloud + advertising absolutely exploded.

They're really paying the conglomerate tax.

They're making the right bets in the right industries, and there’s not much public talk about robotics. 

But to clean up their growth path, they gotta break up the behemoth.

There's probably 2 or arguably 3 multi-trillion dollar businesses trapped inside.

Clearly, investors are not rewarding the stock for that incredible performance.