AI Investment & Job Cuts - Big Tech companies like Amazon and Alphabet are investing hundreds of billions of dollars in generative AI infrastructure, including custom chips and data centers [2] - Amazon is planning the largest corporate job cut in its history while investing heavily in AI [1] - Amazon announced it is cutting 14,000 corporate roles [2] - Internal documents show Amazon is reportedly looking to automate 75% of warehouse operations, potentially avoiding 600,000 new hires [6] Workforce Restructuring - Big Tech is becoming leaner, moving faster, and reallocating resources toward AI [3] - Meta aggressively hired elite AI talent with blockbuster pay packages, even as it slashed thousands of roles [3] - Microsoft eliminated 15,000 jobs [4] - Amazon's job cuts could climb to 30,000, potentially the largest round of white-collar layoffs in the company's history [4] - Generative AI is expected to shrink the workforce [5] - The industry is seeing a thinning out of middle management ranks to flatten the org chart and expedite decision-making [8][9]

Group 1: Amazon.com Inc. - Amazon is expected to post steady third-quarter gains driven by strong performance in cloud, advertising, and retail [1] - Analyst Mark Mahaney projects Amazon's revenue at $178 billion and operating income at $19.5 billion for the third quarter [3] - AWS revenue is anticipated to grow 18% year over year, with North American retail revenue expected to reach $104.7 billion (up 10% YoY) and International retail revenue at $41.2 billion (up 15%) [4] - Advertising growth is expected to remain strong, supported by Prime Video and connected TV partnerships [4] - Automation in fulfillment centers is expected to yield cost efficiencies, and expanding Prime Same-Day to grocery delivery enhances customer engagement [5] Group 2: Apple Inc. - Apple is positioned for a strong quarter, benefiting from robust iPhone 17 demand and easing headwinds in its Services segment [6] - Analyst Amit Daryanani forecasts revenue growth of around 8.6% sequentially, with gross margins expected between 46% and 47% [6] - 59% of surveyed consumers plan to buy the iPhone 17, above the historical average of 45% [7] Group 3: Microsoft Corp - Microsoft is expected to deliver a strong fiscal first-quarter performance, driven by accelerating momentum in Azure and AI [7] - Analyst Kirk Materne anticipates Azure's growth to exceed company guidance, with AI emerging as a key catalyst [8] - Capital expenditures are expected to remain elevated as Microsoft expands its data center footprint, with continued investments in AI infrastructure sustaining long-term growth [8]

Core Insights - Amazon is expected to implement the largest corporate job cuts in its history, with plans to cut 14,000 corporate roles, potentially rising to 30,000, which would surpass the previous cuts of 27,000 jobs in 2022-2023 [2][4] - Major tech companies like Amazon and Alphabet are investing heavily in generative AI infrastructure while simultaneously reducing their workforce [2][4] - The trend of job cuts is part of a broader strategy to streamline operations and reallocate resources towards AI development, with companies aiming to flatten organizational structures for quicker decision-making [5][9] Company-Specific Developments - Amazon's CEO Andy Jasse indicated that generative AI will lead to a reduction in workforce, with internal documents suggesting plans to automate 75% of warehouse operations, potentially avoiding the need for 600,000 new hires [5][6] - The job cuts at Amazon reflect a wider trend in the tech industry, where companies like Meta and Microsoft have also reduced their workforce while investing in AI talent and infrastructure [3][4] Industry Trends - The tech industry is experiencing a significant shift towards automation and AI, leading to a reduction in middle management roles as companies seek to enhance efficiency and expedite decision-making processes [8][9] - The current landscape indicates a dual approach where companies are scaling back on headcounts while increasing capital expenditures to support AI initiatives, highlighting a transformation in workforce dynamics [5][6]

Core Insights - Amazon is set to report third-quarter 2025 results on October 30, with expected net sales between $174 billion and $179.5 billion, reflecting a growth of 10-13% year-over-year, despite a negative impact of approximately 130 basis points from foreign exchange rates [1] - The Zacks Consensus Estimate for third-quarter earnings is $1.58 per share, indicating a growth of 10.49% from the previous year [2] Financial Performance - Current estimates for third-quarter earnings per share have shown a slight upward trend, with the latest estimate at $1.58 compared to $1.54 three months ago [3] - Amazon has a strong earnings surprise history, with a 26.32% surprise in the last quarter and an average surprise of 22.98% over the last four quarters [6] Business Segments and Growth Drivers - Amazon's e-commerce and cloud markets are benefiting from strong performance, with AWS revenues projected to grow 18.4% year-over-year to $32.49 billion, driven by AI infrastructure investments [9][11] - The advertising business generated $15.69 billion in the second quarter of 2025, representing a 23% year-over-year growth, supported by new innovations and expanded capabilities [14][15] - The online stores segment is estimated to generate $66.3 billion in revenues, reflecting an 8% year-over-year increase, aided by enhanced product discovery tools and AI features [21][22] Strategic Initiatives - Amazon's Prime Day event in July 2025 resulted in record sales, with U.S. e-commerce sales reaching $24.1 billion, showcasing strong momentum [16] - The company expanded same-day grocery delivery to over 1,000 cities, integrating thousands of perishable items into its delivery network, which is expected to enhance customer engagement and competitive positioning [19][20] Market Position and Valuation - Amazon's shares have gained 3.6% year-to-date, underperforming compared to the broader Zacks Retail-Wholesale sector and the S&P 500 index [23] - The company is trading at a forward 12-month price-to-sales ratio of 3.14X, indicating a premium valuation compared to the industry average of 2.23X [27] Investment Thesis - Amazon presents a compelling buy opportunity ahead of its earnings report, driven by strategic initiatives in AWS, advertising, and grocery expansion, which are expected to support long-term shareholder value creation [30] - The convergence of multiple growth engines, including cloud computing, digital advertising, and e-commerce innovation, positions Amazon for robust growth [31]

Core Insights - Amazon is undergoing significant layoffs in its video game development and publishing divisions, particularly affecting its studios in San Diego and Irvine, as part of a strategic reevaluation of its gaming business [1][6] - The company has decided to halt a substantial portion of its first-party AAA game development, especially in the MMO segment, which reflects a broader shift in strategy within Amazon Games [1][6] - The recent launch of Luna, Amazon's new gaming platform, emphasizes a focus on streaming entertainment and delivering value to Prime members, indicating a pivot towards integrating gaming with Amazon's broader service offerings [3][5] Company Strategy - The company is critically assessing the evolving dynamics of the gaming industry and competitive landscape, leading to the decision to reduce roles in its game studios and central publishing team [1][6] - Amazon aims to deliver the best gaming experiences while leveraging its strengths, as demonstrated by the launch of Luna with a catalog of social party games and AAA titles [5][6] - Despite the cuts, Amazon continues to develop games, with ongoing projects like March of Giants and collaborations with external studios for upcoming titles [7] Impact on Employees - The layoffs are part of a larger corporate restructuring, with notifications already sent to most affected employees, while others will follow local processes [8] - The company acknowledges the difficulty of these changes and the impact on team members who have contributed significantly to its gaming efforts [9]

Core Insights - Investors are overly enthusiastic about artificial intelligence, with OpenAI CEO Sam Altman warning that this excitement may lead to potential losses as the hype diminishes [2][4] - Major technology companies are projected to spend approximately $320 billion this year on AI infrastructure, indicating a significant commitment to the sector [1][4] Company Investments - Microsoft plans to invest around $80 billion in AI-enabled data centers in 2023, marking its largest infrastructure budget to date [3] - Amazon, Meta Platforms, and Alphabet are also increasing their capital expenditures, with Amazon focusing on scaling its cloud infrastructure for AI services [3][4] - Meta's capital expenditures are estimated between $66 billion and $72 billion, while Alphabet continues to invest heavily in data-center infrastructure [4] Industry Trends - OpenAI is expanding its offerings, recently introducing new tools for developers to integrate ChatGPT into applications, emphasizing enterprise adoption [5] - Analysts are divided on the AI market's sustainability, with some believing it will drive a tech bull market for the next two to three years, likening the current phase to 1996 rather than 1999 [5]

Core Insights - Amazon plans to cut 14,000 corporate jobs as part of a strategy to streamline operations in response to advancements in AI [1][3] - The job cuts will affect employees in the US, Canada, and Europe, with notifications already sent out [2][3] - Affected employees will receive full pay and benefits for 90 days, along with a severance offer [2] Job Cuts Details - The layoffs will impact various departments including advertising, recruitment, payments, devices, Fire TV, and customer behavior analytics [3] - Audible, Amazon's audiobook and podcast division, is also included in the job cuts, with a focus on critical growth areas [4] - The company has communicated with local works councils in Germany regarding the job cuts [6] Company Performance Context - Despite the company's overall performance, the decision to reduce jobs is attributed to the rapid changes brought by AI [3] - Amazon has a total of 1.55 million employees globally, with the cuts representing about 4% of its approximately 350,000 corporate workforce [11]

Welcome back. Amazon says it will be eliminating thousands of corporate jobs as it looks to further invest in AI. Our Mackenzie Sagalos has more on the areas of the business that'll be most affected.Morning, Mac. >> Hey, good morning, Carl. So, this is the latest chapter in Amazon's multi-year efficiency drive, which is largely focused on hollowing out layers of middle management.Now, the company is cutting 14,000 white collar jobs or about 4% of its corporate workforce with layoffs hitting teams across the ...

Group 1 - Amazon is eliminating 14,000 corporate jobs, approximately 4% of its workforce, as part of a multi-year efficiency drive focused on reducing middle management layers [2][3] - Layoffs will affect various teams, including video games, grocery, HR, communications, ads, and devices, with expectations of further cuts through 2026 [2][3] - If total layoffs reach 30,000, it will mark the largest corporate layoff in Amazon's history, as the company reallocates resources towards data centers and AI infrastructure [3][5] Group 2 - The trend of job cuts is part of a broader industry shift among major tech companies, with significant layoffs reported by Meta, Google, and Microsoft as they invest heavily in AI [4][5] - Amazon has already cut over 27,000 jobs since 2022 and plans to spend more than $120 billion on capital expenditures this year to compete in the cloud sector [5] - Internal documents indicate Amazon aims to automate 75% of its operations by 2033, potentially avoiding the need for 600,000 new warehouse hires [5][6] Group 3 - The current environment suggests that while AI investments are boosting stock prices, they are simultaneously leading to reduced employment levels [6] - Upcoming earnings reports from Amazon and Google are anticipated to reflect increased spending commitments in the AI and cloud sectors, with pressure on consensus estimates for hyperscaler capital expenditures [7] - A recent commercial agreement between Microsoft and OpenAI guarantees $250 billion worth of compute from Microsoft Azure, opening opportunities for Amazon Web Services to compete for OpenAI's business [8]

It's time to spotlight this week's mag seven earnings. Joining us now is Shiraz Mian, the director of research at Sachs Investment Research. Shiraz, thank you for being with us ahead of this allimportant week.You know, as far as the mag seven results, how important is their performance for the broader market. >> Uh well, uh it is very important because they uh account for so much of the S&P 500 index uh in terms of the market cap. uh and then in recent years they have also been uh like really sizable contri ...