Jassy’s $600 Billion AWS Outlook Bodes Well for Multiple Holdings

AWS re:Invent 2024

While we finish up our more comprehensive comments stemming from Nvidia (NVDA) CEO Jensen Huang’s GTC keynote yesterday and reports today the company plans to utilize 50% of free cash flow this year to drive shareholder returns, let’s touch on some other Portfolio-related developments.

Jassy’s Big Outlook for AWS

On the heels of Jensen Huang's $1 trillion forecast for Nvidia Blackwell and Rubin chips, reports indicate that at an internal meeting, Amazon (AMZN) CEO Andy Jassy said AI could double revenue at Amazon Web Services (AWS) to some $600 billion by 2036.

Those are two very big back-to-back numbers in back-to-back days, but looking at them together speaks to rising AI adoption, and even more to rising usage. Back in December, we compared AI adoption and usage to internet adoption and usage, explaining why the expanding number of use cases has a larger multiplier effect on infrastructure demand. Internet usage today is far more widespread compared to 15 or 20 years ago. We see the same ahead for AI but at a much brisker pace given the number of connected devices and the increasingly digital lifestyle. Jassy’s outlook likely contemplates something similar and the demand that it creates for AWS.

While Amazon will need to scale its infrastructure as that usage grows, as it monetizes that infrastructure, we should see earnings step higher over time. Remember that, for all is discussed about Amazon and its digital retail business, AWS drives roughly 57% of Amazon’s operating profit.

And that build-out bodes very well not only for shares of Nvidia, but also our positions in Broadcom (AVGO) , Marvell (MRVL) , Arista Networks (ANET) , Eaton (ETN) , and others in the Portfolio.

A Close Eye on Broadcom Shares

As for AVGO shares, the very recent pullback has them once again flirting with their 200-day moving average. As we move into today’s market close, they are below that $323.51 level, which means we’ll be keeping a close eye on them over the coming days.

Much like the big numbers put forth by Nvidia and Amazon yesterday and today, recall that during Broadcom’s recent earnings call, management shared that it has “line of sight” for custom AI chip revenue in excess of $100 billion in 2027. That compares to the annualized revenue of around $42.8 billion for the current quarter.

Tim Cook Plans to Stick Around

Appearing on ABC’s Good Morning America, Apple (AAPL) CEO shared he has no intention of stepping down from his position at the company. The speculation was sparked by Cook turning 65 last November, but our thinking is that at some point he will relinquish the CEO role and that he could replace Apple Chairman of the Board Arthur Levinson. Levinson has been the chairperson since 2011 and will turn 75 years old later this month.

How soon that happens is to be determined, but it’s a natural transition and one that would allow Cook to maintain the company’s culture and the legacy of Steve Jobs. How we long for the WWDC keynote presentations given by Jobs over the ones of the last few years.

Trade Desk Gets DKed by Publicis

While we exited the Portfolio’s position in The Trade Desk (TTD) roughly 13 months ago at just over $72 compared to the sub $30 level it’s been at over the last month-plus, we do tend to get questions from members from time to time on the stock. With that in mind, Adweek is reposting that advertising firm Publicis is advising its clients to avoid working with demand-side platform (DSP) The Trade Desk.

Here’s what Adweek had to say:

In an email sent Tuesday to select clients, obtained by ADWEEK, the company explained that The Trade Desk failed an audit conducted by a third-party consultant that evaluated the platform’s fee structures and media and data spend.

The Trade Desk “improperly applied their DSP fee to other fees” it charged and charged Publicis and some of its clients for tools that they were automatically opted into—without providing evidence that the holdco or its clients authorized the addition of those purchases, the audit found. Plus, the memo claims, The Trade Desk “did not provide our auditor with the information necessary to validate that the media and data costs were invoiced at cost, without mark-up as per our agreement.”

Publicis added in the memo that it “engaged the highest levels of leadership at TTD” and “have been unable to come to a satisfactory resolution pertaining to these audit findings.” It wrote: “Accordingly, we can no longer recommend The Trade Desk for our clients.”

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