00:00 Speaker A
You think AI CAPEX ramps from 350 billion in 2025 to 450 billion in 2026 among the mega caps. What what does ROI Mark look like in all that spend? What what are the signs and the signals we’re getting as investors?
00:16 Mark
Yeah, I think these companies, that’s Microsoft, Amazon, Google, Meta, are all leaning into AI. They believe that this is a real dramatic product inflection point.
00:30 Mark
Uh, so I, you know, these are rational capitalists. I assume they wouldn’t be leaning in more if they didn’t think they were getting a good return. I have to step back as an objective analyst and see, do I have data points that prove this?
00:46 Mark
Well, I do have, um, some wonderful data points out of Meta. You’ve seen an acceleration in their ad revenue growth for, you know, two or three years now. You’ve seen a dramatic inflection up in the revenue per employee across all four of those companies that I mentioned. There’s a lot of things that go into that number, but I’m absolutely certain that AI productivity boosts, not just costs, not just better management of costs, but productivity boosts are uh, are part of that.
01:09 Mark
Um, and then I just uh, you know, worked on our a report on this wonderful application called Rufus within Amazon that’s already generated something like 10 billion in incremental sales for Amazon. That’s a small number for them, but the product just rolled out, or the feature’s really just very recently rolled out, and it’s led to this 60% increase in conversion for Amazon shoppers who come in and use Rufus. Like, I think you’re going to start seeing more and more deployments and applications.
01:42 Mark
Then you’re going to see uh online retail, online travel, online advertising, all of those are going to have performance improvements and they already are starting to show that in terms of uh AI and it’s going to show up in a P&L’s. You’re going to see these sustainably high revenue growth rates and in some cases acceleration.
02:00 Mark
In fact, my number one pick is Amazon in part because I think you’re going to see this acceleration due to AI. And I think we’re going to look back on this uh, you know, a year from now or two years from now and said, yeah, those were the sign posts when you saw those uh revenue growth rates start to accelerate.
