Finimize - 💸 Amazon didn't disappoint

What’s going on here?

Amazon’s first-quarter results, released late on Tuesday, proved that the company’s still firmly in its prime.

What does this mean?

Investors have clearly pinned their hopes – and their cash – onto Amazon lately. The stock has risen 15% since January and 66% over the past year, playing a major part in the S&P 500 index’s increase. Well, they won’t be disappointed. Amazon made a better-than-expected $143 billion in revenue last quarter, 13% more than the same time last year. Profit came in 16% higher than predicted at $10.4 billion, too. That was spurred on by revenue at computing services division Amazon Web Services (AWS) picking up by 17% over the last year, when it was predicted to increase by 15%. Investors didn’t even seem too bothered that the famously cautious company expects this quarter’s sales to land slightly below Wall Street’s $150 billion forecasts: the stock rallied 3% initially on the results.

Why should I care?

Zooming in: A rolling stone.

Amazon’s rock-bottom prices and lightning-fast delivery speeds make it impossible for shoppers to resist – and equally hard for smaller firms to rival. And the juggernaut isn’t stopping there: it wants to make AWS the one-stop shop for developers and businesses. It might just pull that off, too, with plans to pump $150 billion into data centers in the next 15 years. Those centers have already made Amazon the world’s biggest buyer of renewable energy – part of the company’s 2025 pledge to be fueled solely by renewables.

The bigger picture: Big Tech… and beyond.

Massive spending on AI by the “Magnificent Seven” tech firms is only bolstering their dominance, while keeping smaller firms at bay. That said, investors still have other choices outside of Big Tech’s finest. AI’s impact has already spread across a wide range of sectors, from semiconductors to data centers – and right now, always-on data centers are pushing up demand for power generation and copper.

What’s going on here?

AI’s insatiable appetite for energy has put non-renewable fuel back onto the table, marking the ultimate utopia versus dystopia standoff.

What does this mean?

Everyday folk are consulting chatbots about their life plans, vacation schedules, and sometimes, just because they’re lonely. And all that “thinking” requires a lot of energy. That’s why American firm Dominion Energy, which powers most of Virginia’s data centers, is expecting energy use to quadruple over the next 15 years. Mind you, electricity providers might not have enough to hand out. Tech giants are flaunting their eco-credentials by palming off fossil fuels, utility companies are scrambling to keep the lights on, and regulators are hustling to make the grid greener. So in an effort to keep everyone fed, utility companies plan to keep their barrel taps plugged into fossil fuels for the time being – ironically, partly to keep pace with the push into renewables.

Why should I care?

Zooming out: The new American diet.

The US has been trying to cut down on coal, trimming around ten gigawatts a year from its arsenal over the last decade. But according to S&P Global Commodity Insights, rising demand for fuel of any kind could slow that reduction down to six a year until 2030. Wind and solar power aren’t developed enough to ensure a smooth transition yet, see, and while natural gas and nuclear power could plug the gap, that’s not a fast fix.

The bigger picture: Commodities will cost you.

Clean energy might not need to pull coal out of the Earth to run, but it does need plenty of metals. Add in supply issues and increasingly strained geopolitical tensions, and commodity prices have been pushed a lot higher than usual. In fact, the World Bank says that even if prices fall by 3% this year and 4% next, the index tracking them will still be sitting 38% above the average from 2015 to 2019.