Amazon Reports Record $20B Profit

FINANCE
Amazon Reports Record $20B Profit

Amazon has transformed from a company once criticized for its lack of profitability to a financial powerhouse. In Q4 2024, it reported a record $20 billion in profits, nearly doubling the previous year’s figure. CEO Andy Jassy is using this momentum to invest heavily in AI infrastructure, planning over $100 billion in capital expenditures for 2025, a 20% increase from 2024. The majority of this spending will go toward expanding Amazon Web Services (AWS) and AI capabilities, as the company competes in what Jassy calls “the biggest technology shift since the internet.”

Amazon’s profitability is driven by strong margins in AWS, which posted a 37% operating profit margin, and its rapidly growing ad business. The company also continues optimizing costs, reducing per-order fulfillment expenses. Despite this success, Amazon’s stock dipped 4% after-hours due to cautious Q1 guidance. However, Jassy remains confident that AI’s cost efficiency will fuel widespread adoption, securing Amazon’s long-term dominance in cloud and AI.

TECH
DeepSeek Challenges Nvidia’s AI Dominance

DeepSeek’s latest AI reasoning model has shaken the industry, challenging Nvidia’s dominance and sparking demand for alternative AI chip solutions. The Chinese startup claims its R1 model rivals top American AI technology at a fraction of the cost, reducing reliance on Nvidia’s expensive GPUs. This disruption has fueled opportunities for smaller AI chip firms, with companies like Cerebras Systems and d-Matrix reporting a surge in interest for inference chips.

Unlike AI training, which requires powerful GPUs, inference relies on more efficient, cost-effective chips to deploy AI in real-world applications. As DeepSeek’s open-source approach gains traction, chipmakers like Etched and Groq see rising demand, with businesses shifting spending toward inference clusters.

Experts predict DeepSeek’s impact will accelerate AI adoption, following Jevon’s Paradox, where cost reductions drive higher demand. While Nvidia remains dominant, increasing AI usage worldwide may open doors for smaller players to thrive in the rapidly evolving AI infrastructure market.

FINANCE
UnitedHealth Reports Ackman to SEC

UnitedHealth Group Inc. reported contacting the U.S. Securities and Exchange Commission (SEC) after investor Bill Ackman’s now-deleted post on X suggested the company overstated its profits.

UnitedHealth shares dropped 4.3% on Wednesday following Ackman’s post, where he speculated that the insurer’s profitability might be inflated due to denied medical procedures and patient care. In response, UnitedHealth stated that the industry is subject to strict regulatory oversight and dismissed Ackman’s claims as “grossly uninformed.”

A spokesperson for Ackman declined to comment. Ackman, 58, previously stepped away from short selling after his failed $1 billion bet against Herbalife Ltd., which he alleged was a pyramid scheme. The stock doubled in value, with investors like Carl Icahn profiting from the opposite trade.

UnitedHealth’s engagement with regulators underscores the scrutiny surrounding major health insurers and the impact of influential investors’ public statements on market movements.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.