Meta Beats. Microsoft Misses. Why Amazon Matters Most

**Dave** (0:00)
This week, Meta beat earnings and the stock shot up 10 percent. Microsoft missed and dropped more than 10 percent, taking down just about every software company with it, which actually makes sense. Advertising's bounced back. Everyone's worried AI is going to replace legacy software. There was one highlight from Microsoft, their cloud usage is picking up even though their margins are falling and capex spending on AI has absolutely exploded. But when you think AI and cloud and infrastructure that isn't Microsoft or Google, one company comes to mind, Amazon. Next week, they post their earnings. We're going to see if AWS demand is accelerating again. And maybe we'll get some insight on that $50 billion investment that Amazon could make in open AI. Today on Dumb Money, why Amazon might be the cleanest way to invest in AI and why Amazon earnings are the ones that really matter. This is Dumb Money Live.
Hey there, Dave here along with Chris and Jordan. We are Dumb Money. Welcome to Dumb Money Live. Quick reminder, smash the like button for the almighty algorithm. We are now three shows in three weeks. I think that deserves a like. And while you're at it, go ahead and give us a repost on X, which I see Chris, you've already remembered to do. People in the comments this morning wanted to make sure we reminded you of that. And also for those who are betting on the prediction market as to what color hat Jordan would be wearing, if you were guessing green, you're wrong. It looks like a black hat today.

**Jordan** (1:31)
Now, you can't wear a green hat before the Masters. That's the rule.

**Dave** (1:36)
And no white pants before Labor Day or after Labor Day or something.

**Jordan** (1:39)
Those are the two rules I live by.

**Dave** (1:41)
And if you take off your hat, or if we get 100 likes, you might take off your hat.

**Jordan** (1:47)
I will not.

**Dave** (1:48)
That is all of our three-show commentary.

**Jordan** (1:49)
I didn't get a chance to do my hair today, so that's not going to happen.

**Dave** (1:53)
You didn't polish the old Chrome Dome?

**Jordan** (1:57)
Easy.

**Dave** (2:00)
All right, it's a Friday show, a Friday free-for-all. We will probably have some time for comments later on, but we do need to talk about Amazon earnings, which are next week. It's the one that I think that the three of us are kind of keeping our eye on, just because Amazon is not just the place where I buy absolutely everything I buy, but it is the place where the Internet happens and where AI is kind of, I don't know, it's the birthplace of, not the birthplace, but the hosting place of AI. I don't know what I'm talking about.

**Jordan** (2:37)
No one does.

**Chris** (2:41)
Dave, this is what happens when you move to Mexico. Dave's losing his mind slowly.

**Dave** (2:47)
A little bit at a time. Slow at first and then all at once.

**Chris** (2:53)
I love it that we're sitting here in 2026 waiting on the big Amazon pop after this stock has just been trending sideways, amazingly, through the entire AI cycle, which is just quite honestly astonishing to me. That is exactly...

**Jordan** (3:12)
Well, I mean, you've got two active sellers in the market, no matter what, right? And so that's the rub with Amazon. That's why Amazon is really hard.
You got one guy that's trying to fund outer space and yachts, and then you've got another lady who wants to donate it all to charity, and that's fine. That's fine. But it does mean that there is an act of seller in the market.

**Chris** (3:36)
Jordan, you just nailed it. But that's what makes Amazon such a great investment, is that we have this multi-year cycle with the two of the biggest shareholders continuing to exit out of the company for reasons that have nothing to do with the company's performance.

**Jordan** (3:54)
That's one of the hardest things about Amazon too, right? You know there's just constant selling, and it doesn't matter if the company is doing well or poorly, it's just going to be there.

**Chris** (4:05)
That's a benefit to investors though. That is an absolute benefit to long-term investors because it essentially puts an artificial headwind on the stock, which I love because we talk about this over and over and over again. You could not wish for anything more as an investor in a company that you want to invest in than it to be artificially held down for a prolonged period of time to give you more of an opportunity to accumulate a position at prices that are lower than they should be. I love it. I love it. And I'll continue to trade earnings on Amazon and lose money if I have to, because long-term I'm going to make it all back times five because of that artificial headwind that will eventually start to dissipate. So let's talk about it. Before we talk about Amazon, let's talk about Microsoft. Guys, Microsoft, here's what it all comes down to. Two things. Yes, they got crushed yesterday on earnings, but the reason they got crushed is primarily due to the fact that, one, they have been transitioning a chunk of their compute from revenue generative compute to internal compute that doesn't generate revenue, that's more long-term cited for the company. Now, you can agree or disagree with that strategy, but in the short term, that strategy is not awesome for Microsoft revenue and profits specifically. Number two, Microsoft came out yesterday and essentially disclosed that they have a massive concentration around one client in terms of its future compute revenue and that one client has a dark shadow over their company right now. It's OAI. And you do not want to come out this week, out of all weeks, and say that roughly half of your future AI revenue is pinned on a company that a lot of institutions feel is at risk of being over levered and not meeting their obligations. In fact, I've spoken to a number of people this week that feel, and I'm not sure I totally agree with this, but a number of people that are heavy hitters institutionally, especially coming out of Davos. The word was that OAI is at risk later this year, and they have a very short window of time to raise a meaningful amount of capital.