The Big Sleeper at Amazon’s Hardware Event

On Monday, we shared that one of the Tuesday updates we would be following is Amazon’s (AMZN) hardware event, especially ahead of its next Prime Big Deals Day event that spans October 7 to October 8.

In the past, Amazon has showcased its new hardware ahead of the holiday shopping season, and given next week’s shopping event, we’re likely to see some deals on these new models and or prior iterations.

We expected to hear quite a bit about Alexa+, Amazon’s next-gen virtual assistant, and yes, the company announced a host of Alexa+ updates, with many of them enabling new integrations alongside the company's brand-new devices. Those include new Ring devices, the new smart TV operating system dubbed Vega, and the Kindle family. Odds are that the greatest impact will be to Amazon’s Echo devices, which are being refreshed for the first time in several years, and will also include third-party integrations from Fandango, Uber (UBER) , Lyft (LYFT) and others.

While Amazon has strong market share positions with its Kindle, Fire TV and Echo products, the company does not break out sales of those and other devices when it reports its quarterly revenue. Even the more detailed 10K doesn’t tell us where in the company’s reported line items those revenues show up. It’s blended into one of its existing reporting segments, but whether it's split based on geographic region or not is something that is elusive. It also means we do not have a clear picture of how impactful these sales are on the company’s revenue stream.

But let’s remember the big drivers of Amazon’s profit performance are Amazon Web Services and its growing advertising business.

The way we think about Amazon’s hardware products is that they are gateways that help remove transaction friction for consumers and help foster the consumption of other Amazon products and services. As this new array of Alexa+ products is purchased and utilized, they will help drive AI usage, which in turn will drive network and data center capacity utilization higher, driving incremental spending on data center and other aspects of digital infrastructure, including networking. Just like AI adoption we are seeing in PCs, smartphones and other devices, and the combination keeps us bullish on multiple Portfolio holdings, especially Nvidia (NVDA) and Marvell (MRVL) .

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At the time of publication, TheStreet Pro Portfolio was long AMZN, MRVL and NVDA.