$ZHENGWEI GROUP (02147.HK)$ AWS re: Invent 23 Preliminary Hi...

AWS re: Invent 23 Preliminary Highlights and Partner Checks: focus on Generative AI, Adoption of Amzn to Enhance Full Stack Strategy; Online Optimization Purchase PT $190 - JPMorgan Chase

We're attending Amazon's AWS re: Invent conference this week, and as expected, generative AI is the main focus, with the conference keynote and our customer conversations focusing on AWS Gen AI strategies at all layers of the stack, particularly Silicon Provisioning/Provisioning, Bedrock, and Application Tier Services (Amazon Q, CodeWhisperer). Our discussions indicated that AWS has made steady progress in building its Gen AI strategy and capabilities, with a focus on providing a large number of customizable FMs in a secure environment.We are confident that AWS has begun to close the gap that Genterative AI had in the early days, and that over time, silicon development, breadth of LLMs, and important customer data have moved to the AWS cloud, all of which are key differentiators have moved to the AWS cloud. The tone around optimization is consistent with Amazon's comments in its Q3 earnings report (which waned), and we continue to believe that new workload deployments, loose comparisons, and generation AI monetization will drive accelerated AWS growth in Q4 and 2024.

Our December 2024 PT of $190 is 12.5x based on 2025 adjusted EBITDA of $151 billion, which equates to 25x FY2025 FCF of $74 billion. Given Amazon's lower profitability, this is a discount to MSFT, which currently trades at 19x, and AAPL, which trades at 21x.