Apple and Amazon – The Have Nots.

It is no coincidence that Apple and Amazon are AI’s biggest detractors.

• Competition in AI is spilling over into public relations and marketing and I think that it is no coincidence that the two companies that have the most to gain from an implosion of the AI proposition are also its biggest detractors.
• Following on from two pseudo-scientific papers from Apple (see here and here), Amazon is now spreading fear among its white collar employees that AI will put their jobs at risk.
• Andy Jassy, CEO of Amazon, said in a memo that “in the next few years, we expect that this (AI) will reduce our total corporate workforce”.
• This is a fairly negative view of the impact of AI on the workforce and not one that I subscribe to.
• My view (and one that is largely backed up by history), is that AI will enable employees to become more productive and corporations to become more efficient by being able to increase revenues more quickly than costs.
• In this sort of scenario, a rational investor tends to invest more, not less, which, taken to its logical conclusion, would lead to more jobs, not less.
• Furthermore, all of this is possible without the machines having to become more intelligent than humans, as without AGI, they still have what I consider to be superpowers that they did not have before.
• These are the ability to ingest, understand, cross-reference and retrieve vast amounts of unstructured data and the ability to use natural language as the man-machine interface.
• On their own, RFM Research has concluded that these “superpowers” offer substantial improvements in employee productivity and opportunities for companies to grow their revenues much more effectively.
• Hence, I suspect that most companies will use this opportunity to invest in being more productive rather than simply slash costs to the bone.
• For example, with better AI, Amazon could significantly grow its revenues by using the data that it has more effectively.
• The continued awful state of Alexa, constant advertisements on its site for products I have already purchased from Amazon, and its investment in Anthropic is all the evidence I need to conclude that, like Apple, Amazon has an AI problem.
• This is nothing new, as RFM Research has concluded since 2018 or so that Amazon was a laggard, and unlike Meta Platforms, it has not materially improved in the last 7 years.
• Hence, Amazon is at risk of being left behind when it comes to AI, and so it stands to benefit if the whole proposition comes crashing down.
• Consequently, I am somewhat sceptical when it comes to these comments, and I am not inclined to take them seriously.
• I also think that Amazon will end up acquiring Anthropic (more cheaply if there is a correction), at which point it will have the know-how to really compete with the leaders.
• At this point, I would expect to see a change in tone from Amazon as there is so much low-hanging fruit inside the company that could make it more efficient and far more profitable without having to fire anybody.
• This is just another reason to look at Alibaba rather than Amazon.
• Alibaba is already quite good at AI, and has a highly profitable and still dominant e-commerce business, with the only drawback from an investment point of view being the fact that it is Chinese.
• Chinese technology remains deeply out of favour despite efforts from the CCP to be more friendly to the private sector now that it has realised that China needs a private sector to become a technology powerhouse.
• Alibaba trades on 11.8x 2025 earnings and, from a business and AI perspective, is in a better position than Amazon, which trades at 34.6x 2025 PER, some 2.9x higher than Alibaba.
• Hence, I continue to have no interest in a position in Amazon and continue to hold Alibaba in the somewhat wearisome long-term game of waiting for a recovery in China.