Google Is A Better Business Than Retailer Amazon

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[Deepzombie]

I think one important component was missing in your Amazon discussion and that is AWS. Businesses pay for that service and the margins are a miracle there too.

[MJHarris]

Recently watched a video with UK investor Terry Smith, who pointed out that return on capital employed is one of the most key factors, along with whether the sector has room to grow, plus a moat. Yes Amazon has room to grow and has a moat, but Google's moat is arguably better, it can still grow and it's ROCE is WAY higher. It's just in a better sector than Amazon is.

[santoshragi]

The currently high margin & currently high return on capital (ROC) don't alone determine if it's a better business. What matters more is if the company can achieve high ROC over time & then SUSTAIN it over time. Determining that sustainability is subjective.
Costco's net margins are in the bottom 1% percentile of the S&P 500 companies. Does that make it a less better business than the remaining 99% percentile?
As for Munger's comments on BABA, he is self-contradicting. On one hand, he abandons BABA for being a retailer but then further embraces Costco.

[danielegianetti]

Fully agree Sven! I sold Amazon last year February, but did hold Google and kept buying more here and there. I think AWS components is too often overvalued as it would "compensate" for the rest of the business ...Azure is surely bringing profits to Microsoft but there is hell of a lot of other source of profits besides the cloud.

[erikm]

Hi Sven. I thought you were in Netherlands now? Are you back in Slovenia again?

[RtoipKa]

Sven, as a customer I would like you to do updates on companies that you cover and/or have in your portfolio. Many of them reported in the last days/weeks and no update. I don't even know if you know because you didn't even send information that you have seen results. Currently even though we pay, we still need to do this ourselves. Instead you make videos to sell access to your platform. It shouldn't be like this.

[petervanree]

Why would you value Amazon and skip over the unit economics of AWS? I would argue AWS is worth more than half of the market cap.

[woodyworld]

Googles Revenue comes 80% from Advertising while Amazon has a diversified Business Model.

[davidkoba]

The thing about amazon is I don’t think they have utilized their add business. They have the ability to sell add space on their website for a premium.

[danielegianetti]

Out of curiosity Sven, why are you looking into Italian market? Looking at Schiller P/E, it is overall overvalued while, instead, the FTSE 250 could have a lot of opportunities and it's in a green side and a lot of negative sentiment coming from Brexit headwinds, the disaster of Liz Truss, etc. What I'm reading is that At the end of 2022, the FTSE 250's CAPE ratio was 18.7. Over the last 30 years, CAPE has had an average value of 25.

[RafitoMembroza]

Well, that's basically the less profitable part of Amazon. AWS, advertising and 3rd party are the key aspect. But in some way it's more a risky bet than Alphabet, that's true

[dbrondi]

Don't understand. Does it mean that BABA is not a good investment? What about all the old video about BABA?

[davidlazarus]

I own both these stocks and Google has much better fundamentals. We forget that Amazon is essentially a retailer. Most retailers have thin net margins normally around 2 to 3%. Amazon also holds stock, rents warehouses, so their sga will be much higher than a software company.

[leestringer]

As for foreign investments (outside of North America) my bank stock trading software demands 1%. Is this common?

[Milziadeac]

HI Sven, i am confused, this video was posted 1 month ago, 7 days ago on the Tristan's podcast you said you much prefer amazon as an investment and prices are very similar.

[eldadperetz]

You miss aws, advertising and many more growth directions that amazon has and google doesn't. That is why amazon is not a retailer and is not priced as wmt and other retailers...

[teapot]

Dear Sven

Could you explain the correlation between the multiplier and the capitalization rate? For example: a multiplier of 20 is the same as a capitalization rate of 5, meaning a high quality company offers a lower reward. This is, unless they grow? How does this work?
T

[rhinelandattitude]

Minnesota...middle of nowhere??? Common, show us some love!

[ryanh]

I have been an Amazon shareholder since 2005 and am considering liquidating my position to find opportunities elsewhere. Not a fan of Alphabet either but strongly considering more shares of Berkshire Hathaway, Costco, or Proctor & Gamble. I am at the point where I am far more worried about losing what I have than growth hence I require a much more modest rate of return.

[davidedeltoro]

Interesting comparison, I largely with you Sven, i think margins are very important. Having said that, the ChatGBT beta impressed me! If Google doesn't react quickly with an alternative to that, those big Google profits could be in danger in the future. That's a risk that wasn't there before. For Amazon i got my own theory. To got me interested in the stock, i want the retail business for free and in AWS business at 30 times 2022 operating profit. Therefore at 685B$ market vs 953B$ at today prices. So it need to drop from 93$ to 66$! 🔻