Good morning. Amazon’s market cap surpassed $2 trillion for the first time on Wednesday, and the company’s CFO is betting big on leveraging AI, both with potential customers and within the company.
Amazon shares are up nearly 30% this year and nearly 50% in the past 12 months. Alphabet’s market capitalization could reach $2 trillion by the start of 2024, still dwarfing Microsoft, Apple and Nvidia, each of which are valued at more than $3 trillion. (Bank of America raised its price target on Amazon to $220 from $210.)
“Amazon is joining the AI world and Wall Street is taking notice. They’ve already secured $2 trillion and have a path to $3 trillion,” Dan Ives, managing partner at Wedbush Securities, told me on Thursday. “Amazon is just hitting the dance floor.”
But on Thursday, Amazon CFO Brian Olsavsky didn’t post on LinkedIn about joining the $2 trillion market cap club, instead commenting at the annual meeting of the company’s Finance and Global Business Services (FGBS) division, which is made up of several corporate teams including accounting, corporate FP&A and treasury operations.
“We heard about generative AI tools that improve fraud prevention, controllership, forecasting and more,” Olsavsky wrote. “Presenters demonstrated how they are working tirelessly to invent and simplify to deliver results, creating better, more innovative experiences for their customers.”
Led by CEO Andy Jassy, Amazon (the No. 2 company in the Fortune 500) has finally reached an inflection point where it can invest heavily in long-term bets like generative AI while simultaneously generating big profits. luckJason Del Rey of Yahoo! News recently reported that in April, Amazon released its first-quarter 2024 results, reporting sales of $143.3 billion, up 13% from the previous year, and profits of $10 billion.
Amazon Web Services (AWS) reported first-quarter revenue of $25 billion, up 17% from a year ago, and AWS is now a $100 billion annual revenue run-rate business, Olsavsky said on the April earnings call.
“We saw growth in both generative and non-generative AI workloads across different customer groups and industries in the first quarter as companies shifted focus to driving innovation and deploying new workloads to the cloud,” he said.Amazon continues to see strong demand for AWS and has launched Amazon Q, an assistant powered by generative AI.
Olsavsky, who has been CFO since 2015 and has worked at Amazon for 22 years, said on the company’s April earnings call that the company remains focused on driving efficiencies across its business to capitalize on AWS’ momentum, including generative AI. He added, “We believe generative AI, and the cloud space more broadly, is still in its relative infancy and has significant growth opportunities.”
Amazon is cutting costs and restructuring its business to invest in AI for the long term. Between November 2022 and March 2023, Amazon will carry out multiple rounds of layoffs, cutting a total of 27,000 employees. Del Rey reported that in May, the company fired more than 100 customer service managers in Level 5 and Level 6 middle management roles, both in call centers and virtual. Amazon divisions such as AWS, Prime Video, and Twitch have all cut hundreds of employees this year.
Have a nice weekend.
Cheryl Estrada
cheryl.estrada@fortune.com
Leader board
Notable developments this week:
Karen Parkhill Parkhill was named CFO of HP Inc. (NYSE: HPQ) effective Aug. 5. Parkhill has served as EVP and CFO of Medtronic, a global provider of medical equipment, since 2016. Parkhill succeeds Marie Myers as CFO, who is leaving her role at HP. Joined Hewlett Packard Enterprise He took over as EVP and CFO in January. Interim CFO Tim Brown will return as head of print finance.
Marcos Gabriel Gabriel was promoted to EVP and CFO of McCormick & Company Incorporated (NYSE: MKC), effective Dec. 1. Mike Smith will remain with the company as EVP and will retire on Feb. 28, 2025. Gabriel, who currently serves as SVP of Global Finance and Capital Markets, joined McCormick in 2017 as CFO for the Americas and also served as chief transformation officer.
Matt Lesmeister Lesmeister has been promoted to CFO of flyExclusive, Inc. (NYSE American: FLYX), a private charter jet company, effective June 25. He succeeds interim CFO Billy Bernard. Lesmeister joined the company as EVP and chief of staff on May 30 and brings 14 years of experience in a variety of public company finance roles, most recently as VP of transformation and strategy at Fox Factory Holdings.
Kathleen ValiasekValiacek, CFO of Local Bounty Corporation (NYSE: LOCL), will assume the additional role of president, effective June 24. Valiacek has served as CFO of the indoor agriculture company since April 2021. Previously, he served as CFO and chief operating officer at Amyris, a producer of sustainable ingredients for the health and beauty market.
Kevin Nihil Nikhil has been named CFO of Rhinebeck Bancorp and Bank of Rhinebeck (Nasdaq: RBKB). Nikhil succeeds Michael McDermott, who retired from the bank after 23 years. Nikhil most recently served as EVP and CFO of St. Mary’s Bank. He also served as SVP and Chief Financial Officer of Berkshire Bank.
Lori Karns Kearns was appointed CFO of Byrna Technologies Inc. (Nasdaq: BYRN) effective July 15. Kearns has more than 20 years of experience and most recently served as CFO of Harte Hanks, a customer experience (CX) strategy firm. Prior to his role as CFO at Harte Hanks, he held various roles including corporate controller, group vice president of finance and vice president of finance.
Eric Ostrovsky Ostrowski has been appointed SVP, CFO and Chief Operating Officer at Akebia Therapeutics, Inc. (Nasdaq: AKBA), a biopharmaceutical company. Ostrowski joins Akebia from Avrobio, where he served as President, Interim CEO and CFO and led the execution of the merger with Tectonic Therapeutic. Previously, he served as CFO at Summit Therapeutics, where he led its initial public offering on Nasdaq.
Big Deal
There’s now a sense of urgency as companies strive to reach net-zero and other sustainability goals and meet regulatory requirements, according to new Accenture research. Surveys and in-depth interviews with more than 700 CFOs across 11 countries found that 81% of finance leaders feel pressured. Of these CFOs, 72% said the greatest pressure to address relevant sustainability issues comes from governments and regulators, followed by 71% from board members and 55% from shareholders/investors.
Upcoming regulations will require companies to report on risks and opportunities related to climate change and seek external assurance on their disclosures. But only 22% of CFOs surveyed said they are prepared to do both. Accenture suggests nine talent-based capabilities for companies to accelerate their sustainability strategies.
Going deeper
Below is an excerpt from Fortune magazine’s article over the weekend.
“Goldman Sachs ‘hit hardest’ in Fed’s latest stress tests of big banks; Bank of America still rates it a ‘buy'” by Michael Del Castillo
“If you invested $1,000 in Apple stock 10 years ago, how much would you have now?” by Alicia Adamczyk
“SoftBank’s billionaire CEO says he came to Earth to build artificial intelligence 10,000 times smarter than humans. ‘I’m very serious about it'” – Will Daniel
“To get the most out of your coffee, it’s best to drink it first thing in the morning.” – Alexa Mikhail
Stories I’ve heard
“We have an even tougher task ahead of us and are focused on building a strong foundation for the future, driving business stability and returning the company to long-term growth.”
–Walgreens Boots Alliance Global CFO Manmohan Mahajan said Thursday in an earnings call for the period ended March 31. Walgreens announced it would close a “significant number” of underperforming U.S. stores. Walgreens faces a challenging operating environment “including continued pressures on the U.S. consumer and the impact of recent market trends that are compressing pharmacy margins,” CEO Tim Wentworth said in a statement. The company lowered its full-year adjusted EPS guidance to a range of $2.80 to $2.95.
