When you look at the results, AWS saw revenue growth accelerate 9% from the March quarter to the June quarter at 37% growth. But more importantly to me is the operating margins also expanded by a percent.
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"100%, that's especially after the last couple of weeks because, you know, a couple things have obviously happened... When you look at the results, AWS saw revenue growth accelerate 9% from the March quarter to the June quarter at 37% growth. But more importantly to me is the operating margins also expanded by a percent."
The big winner, quite honestly, is Google... their revenue growth accelerated 19% and the margins expanded by 3%. And so and by the way they're growing 82% that's a huge number and so you're seeing both growth and profitability at that layer and I really like that
Context
"The big winner, quite honestly, is Google... But their revenue growth accelerated 19% and the margins expanded by 3%. And so and by the way they're growing 82% that's a huge number and so you're seeing both growth and profitability at that layer and I really like that"
Full Transcript
Niles Investment Manager, uh management, founder and portfolio manager, Dan Niles. Hey Dan, before we get into some of these stocks, just to follow up on that, I mean, do you have a view in terms of open source and and, you know, what that means in this battle that is really being joined on all sides here in terms of the Chinese models and the threat they pose versus the likes of a Karp out there saying this is the only way for corporate America to keep its own data safe and build on it? >> Yeah, I mean, I think there there are two separate issues in there, David. The first one is, I think, for those who are taking a bigger picture, you look at what happened when Anthropic was on the board of Figma, right? And they stepped off the board and then a >> [clears throat] >> like a week later they launched a competing product. And so, I think if companies are looking at that, they know they have to keep their data proprietary. So, I 100% agree with that. The second part, which is somewhat separate from the first, you could argue, is open source, right? Because you can have If you have open source, that cuts your cost to produce a lot of these tokens by 90%. And so, I think you need to have a viable open source community out there, because not every model needs the highest-end, you know, Anthropic, OpenAI, Gemini model out there to solve. You don't need them for what's 3 + 3. If you want to go ahead and design a, you know, a data new database, then yes, you need their um highest-end models for that. So, I think there are two separate issues and I believe in open source and I believe that companies should try to keep all their proprietary data proprietary and not share it, because that's where problems get created. >> Yeah, all right. Well, I'm curious. I mean, I know you're a public markets investor, but you know, you know the private market valuations of both OpenAI and Anthropic. Do you think they're overvalued? >> Well, I mean, I think let me answer that differently. If you are going to a world where 90% of the companies aren't using the leading edge models and they're switching to using open source models, then kind of if you're using the right model for the right thing, you don't need a Ferrari to go to the corner store to get milk, right? A Ford will work just fine. And so if you're going ahead and you're starting to split the workloads that way, I think over time my belief is that the model layer becomes more of a commodity. And you you go ahead and you're on Azure or Google Cloud platforms or, you know, whatever, those services will route whatever you're trying to do to the best model available for the task. And I think in that scenario, yes, Anthropic and OpenAI become more commoditized over time and the value accrues to more of the infrastructure players, which includes the cloud platforms and semiconductors. >> So is that how you're positioning your portfolio to a certain extent? >> 100%. That's especially after the last couple of weeks because, you know, a couple things have obviously happened. The situational awareness, you know, getting taken out their public positions, that was a huge deal. That kind of solved my issues with the speed bump, which I saw coming. And when you look at the results, AWS saw revenue growth accelerate 9% from the March quarter to the June quarter at 37% growth. But more importantly to me is the operating margins also expanded by a percent. You look at Azure, similar situation where the growth rate of that accelerated by about 4% to 43% and the margins expanded by a percent. The big winner, quite honestly, is Google. Google bad news was they reported about a week before situational awareness got solved, right? >> Yep. >> But >> Yep. >> their revenue growth accelerated 19% and the margins expanded by 3%. And so and by the way they're growing 82% that's a huge number and so you're seeing both growth and profitability at that layer and I really like that and when you're cranking up the number of tokens you're producing because now you're running open source models at 10% of the cost need the semiconductor chips that are underneath it and within that I like processor vendors I like optical related companies quite a bit.
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