Andy Jassy, CEO of Amazon and then CEO of Amazon Web Services, speaks at the WSJD Live conference in Laguna Beach, California, October 25, 2016.
Mike Blake | Reuters
Throughout its first 25 years as a public company, Amazon has operated under a singular mantra, often to the chagrin of Wall Street: growth is more important than profits.
“We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions,” Bezos wrote.
But with three-quarters of 2022 in the books, it’s clear that the tone has changed. Andy Jassy, who took over as CEO in July 2021, has been in cost-cutting mode to preserve cash as Amazon confronts slowing sales and a gloomy global economy. The stock is down 33% for the year, more than the 25% drop in the S&P 500 and is on pace for its worst year since 2008.
On the recruiting front, Amazon is freezing hiring for corporate roles in its retail business. And last month’s annual hardware event, which normally showcases a roster of gadgets and robots that may or may not still be around in a year or two, was noticeably constrained compared to prior launch events.
“If we look at everything collectively, Amazon seems to care a little more about margin than they have historically,” said Tom Forte, an analyst at D.A. Davidson who recommends buying the stock.
Jassy addressed the recent efforts to rein in costs at Amazon’s global all-hands meeting on Monday.
“Good companies that last a long period of time, who are thinking about the long term, always have this push and pull,” Jassy said at the meeting, according to excerpts shared with CNBC. “There are some years where they’re expanding really broadly. Some years where they’re checking in and working on profitability, tightening the belt a little bit. And sometimes when you have multiple businesses like we do at Amazon, some businesses are expanding at the same time that others are checking in.”
Amazon is far from alone in feeling the pinch. Fellow tech giants Meta and Alphabet have also been cutting costs to reflect a challenging macro environment and a dramatic slowdown after a decade of consistent growth. Companies across the tech sector have announced layoffs and hiring freezes or have lowered their hiring targets for the coming months.
Not that Amazon has put the brakes on all new spending. The company has been on a buying spree in recent months, agreeing to acquire primary care provider One Medical for $3.9 billion, Roomba maker iRobot for $1.7 billion and Belgian warehouse robotics company Cloostermans for an undisclosed amount. The company also said it would spend about $1 billion over the next year on wage increases and expanded benefits for front-line workers, and it has plans to hire 150,000 employees to help manage the holiday rush.
“We have an enormous amount of things that we’re investing in and that will continue,” Jassy said at the meeting, referencing Alexa, Prime Video and grocery as examples of some areas where Amazon continues to spend. “The trick for us during this time is just to balance those long-term investments and bets and customer experiences that we believe are the future of the company, along with really focusing on delivering along the way.”
The recent trend of belt-tightening has raised a longer-term question because it’s coincided with the company’s first ever change in leadership at the top after Bezos’ departure. The change on Jassy’s watch has prompted some analysts and former employees to wonder whether there’s a permanent shift in strategy underway or a temporary reset reflecting economic uncertainty.
Bezos built a reputation as a fearless entrepreneur willing to make big risky bets that could require hefty investment and may not generate meaningful revenue for years, if ever. No wager was bigger than Amazon Web Services, the cloud-computing unit that Amazon launched in 2006 and that Jassy led until his promotion last year.
More recent projects under Bezos included self-driving robotaxis, cashierless stores and delivery drones, all in pursuit of making life easier for customers.
Bezos ultimately axed plenty of products that didn’t pan out after launch. One of the most infamous examples is the Fire Phone, Amazon’s first smartphone that was discontinued in 2015, a year after its debut. Other endeavors with a short shelf life included a restaurant delivery service, social media feed, a device designed to replenish items with one click, a ticketing service, an auction site and an online wine store.
“They’re completely unafraid to kill something that’s not working,” said Craig Berman, a former Amazon vice president for global communications. “That’s never been a problem for them in the past.”
As the head of AWS, Jassy was at the center of Amazon’s profit engine, which gave the company the fuel to invest elsewhere. But since taking over as CEO of the parent company, Jassy has had to navigate the biggest jump in inflation in 40 years, supply shortages and an aggressive organized labor push that’s challenged the company’s long-standing anti-union stance.
More cuts may be coming
He’s putting in place cuts at a time when Wall Street has little appetite for the kind of experimental high-risk investing that defined the Bezos era. In July, Amazon reported its third straight quarter of single-digit revenue growth, largely due to weakening demand in its core online stores business.
Jassy is also working to dial back Amazon’s Covid expansion, which left it saddled with too much warehouse space and too many staffers. Amazon reduced its headcount by 99,000 people to 1.52 million employees at the end of the second quarter after almost doubling in size during the pandemic.
More slashing could be on the docket.
Amazon is in the middle of its annual planning process, which occurs in two phases, referred to as “OP-1” and “OP-2.” OP stands for “Operating Plan.” Former Amazon employees Colin Bryar and Bill Carr wrote about the process in their 2021 book, “Working Backwards: Insights, Stories, and Secrets from Inside Amazon.”
OP-1 typically begins during the summer and involves months of preparation and planning. Each team puts together a proposal outlining key initiatives for the upcoming year, including any requests for funding or new hires. OP-1 documents are typically submitted before the start of the fourth quarter, which covers the critical holiday shopping period, and are reviewed by Amazon’s senior leadership team, called the S-Team.
The second phase, OP-2, takes place in January. That’s when teams finalize their annual plans, potentially tweaking them depending on fourth-quarter performance.
With the risk of recession on the rise, Amazon could be looking at further reductions in its investments if the holiday quarter is weaker than anticipated, a former Amazon manager told CNBC. Another ex-manager from the company said Jassy may be more deliberate about what spending requests he approves as a signal for where Amazon plans to focus given the uncertainty. Both former employees requested anonymity in order to speak candidly.
An Amazon spokesperson said in a statement that the company continuously evaluates “the progress and potential of our products and services to deliver customer value, and we regularly make adjustments based on those assessments.”
Layoffs unlikely
Still, don’t expect to see mass layoffs from Amazon even as the company curtails spending, or pulls the plug on some projects.
When Amazon winds down a business, it typically offers employees the chance to apply for a job elsewhere in the company, several former employees told CNBC. They’re usually given a window of one to three months to look for another role and have the opportunity to meet with various business leaders during that time.
“Amazon is not going to let good talent walk out the door,” said Andrea Leigh, a former Amazon executive who spent almost a decade at the company across a number of different businesses.
There can still be job losses. After Amazon announced it was winding down its telehealth service Amazon Care, it said 159 employees could be laid off. Another 236 employees will be let go from Care Medical, an independent company that was contracted by Amazon to treat Care patients.
One new invention that Jassy may be counting on to goose revenue is a second Prime Day sale. Taking place Tuesday and Wednesday of this week, it’s the first time Amazon has had two of its discount bonanzas in the same year since it launched Prime Day in 2015.
Ahead of its third-quarter earnings report later this month, the multiday shopping event may provide Amazon with an early sneak peek at what’s coming in 2023.
Elon Musk’s SpaceX, is initiating a secondary share sale that would give the company a valuation of up to $800 billion, The Wall Street Journal reported Friday.
SpaceX is also telling some investors it will consider going public possibly around the end of next year, the report said.
At the elevated price, Musk’s aerospace and defense contractor would be valued above ChatGPT maker OpenAI, which wrapped up a share sale at a $500 billion valuation in October.
SpaceX has been investing heavily in reusable rockets, launch facilities and satellites, while competing for government contracts with newer space players, including Jeff Bezos‘ Blue Origin. SpaceX is far ahead, and operates the world’s largest network of satellites in low earth orbit through Starlink, which powers satellite internet services under the same brand name.
A SpaceX IPO would include its Starlink business, which the company previously considered spinning out.
Musk recently discussed whether SpaceX would go public during Tesla‘s annual shareholders meeting last month. Musk, who is the CEO of both companies, said he doesn’t love running publicly traded businesses, in part because they draw “spurious lawsuits,” and can “make it very difficult to operate effectively.”
However, Musk said during the meeting that he wanted to “try to figure out some way for Tesla shareholders to participate in SpaceX,” adding, “maybe at some point, SpaceX should become a public company despite all the downsides.”
The logo for Google LLC is seen at the Google Store Chelsea in Manhattan, New York City, U.S., November 17, 2021.
Andrew Kelly | Reuters
A U.S. judge on Friday finalized his decision for the consequences Google will face for its search monopoly ruling, adding new details to the decided remedies.
Last year, Google was found to hold an illegal monopoly in its core market of internet search, and in September, U.S. District Judge Amit Mehta ruled against the most severe consequences that were proposed by the Department of Justice.
That included the proposal of a forced sale of Google’s Chrome browser, which provides data that helps the company’s advertising business deliver targeted ads. Alphabet shares popped 8% in extended trading as investors celebrated what they viewed as minimal consequences from a historic defeat last year in the landmark antitrust case.
Investors largely shrugged off the ruling as non-impactful to Google. However some told CNBC it’s still a bite that could “sting.”
Mehta on Friday issued additional details for his ruling in new filings.
“The age-old saying ‘the devil is in the details’ may not have been devised with the drafting of an antitrust remedies judgment in mind, but it sure does fit,” Mehta wrote in one of the Friday filings.
Google did not immediately respond to a request for comment. The company has previously said it will appeal the remedies.
In August 2024, Mehta ruled that Google violated Section 2 of the Sherman Act and held a monopoly in search and related advertising. The antitrust trial started in September 2023.
In his September decision, Mehta said the company would be able to make payments to preload products, but it could not have exclusive contracts that condition payments or licensing. Google was also ordered to loosen its hold on search data. Mehta in September also ruled that Google would have to make available certain search index data and user interaction data, though “not ads data.”
The DOJ had asked Google to stop the practice of “compelled syndication,” which refers to the practice of making certain deals with companies to ensure its search engine remains the default choice in browsers and smartphones.
The judge’s September ruling didn’t end the practice entirely — Mehta ruled out that Google couldn’t enter into exclusive deals, which was a win for the company. Google pays Apple billions of dollars per year to be the default search engine on iPhones. It’s lucrative for Apple and a valuable way for Google to get more search volume and users.
Mehta’s new details
In the Friday filings, Mehta wrote that Google cannot enter into any deal like the one it’s had with Apple “unless the agreement terminates no more than one year after the date it is entered.”
This includes deals involving generative artificial intelligence products, including any “application, software, service, feature, tool, functionality, or product” that involve or use genAI or large-language models, Mehta wrote.
GenAI “plays a significant role in these remedies,” Mehta wrote.
The judge also reiterated the web index data it will require Google to share with certain competitors.
Google has to share some of the raw search interaction data it uses to train its ranking and AI systems, but it does not have to share the actual algorithms — just the data that feeds them.” In September, Mehta said those data sets represent a “small fraction” of Google’s overall traffic, but argued the company’s models are trained on data that contributed to Google’s edge over competitors.
The company must make this data available to qualified competitors at least twice, one of the Friday filing states. Google must share that data in a “syndication license” model whose term will be five years from the date the license is signed, the filing states.
Mehta on Friday also included requirements on the makeup of a technical committee that will determine the firms Google must share its data with.
Committee “members shall be experts in some combination of software engineering, information retrieval, artificial intelligence, economics, behavioral science, and data privacy and data security,” the filing states.
The judge went on to say that no committee member can have a conflict of interest, such as having worked for Google or any of its competitors in the six months prior to or one year after serving in the role.
Google is also required to appoint an internal compliance officer that will be responsible “for administering Google’s antitrust compliance program and helping to ensure compliance with this Final Judgment,” per one of the filings. The company must also appoint a senior business executive “whom Google shall make available to update the Court on Google’s compliance at regular status conferences or as otherwise ordered.”
Amazon made plenty of news this week — from advances in the cloud business to questions about its partnership with the U.S. Postal Service — leaving investors with a lot to digest. The flurry of headlines comes at the end of a challenging year. The e-commerce and cloud giant’s stock is up 4.6%, compared to the broad market S & P 500’s 16.4%, and well behind all of its Magnificent Seven peers. Despite the company showing reaccelerating growth in AWS and enhancements to its dominant Prime e-commerce ecosystem, investors remain concerned that it is losing ground in the AI race and could face margin pressure from tariffs. We believe the company has turned a corner. “A better year is ahead as management continues to prove out its AI strategy and expand operating margins,” Jeff Marks, portfolio director for Club, wrote in a report on Thursday, highlighting stocks that are set up for a bounce back in 2026. Here’s how this week’s news fits into that investment thesis: Upbeat updates at cloud event News: During Amazon ‘s annual re:Invent 2025 conference in Las Vegas, Amazon Web Services CEO Matt Garman unveiled Trainium3 , the latest version of the company’s in-house custom chip. It delivers four times the compute performance, energy efficiency, and memory bandwidth of previous generations. AWS also announced that it is already working on Trainium4. The company also revealed a series of cloud products, including advanced AI-driven platforms and agents that help customers automate workloads. Our take: We were pleased to hear that AWS continues to innovate its chip offerings to diversify its reliance on Nvidia , the industry leader in graphics processing units (GPUs). However, most of the investor focus is on bringing data center capacity online. Amazon needs to buy more Nvidia chips to catch up in AI. Also, Jim Cramer interviewed AWS CEO Matt Garman on “Mad Money” earlier this week, who was upbeat about the future growth of the cloud business. USPS ties tested News: According to a Washington Post report, Amazon could sever its relationship with the USPS when its contract expires in October 2026. Amazon likely considered the move, as it already has a shadow postal service, Amazon Logistics, that handles billions of packages annually. By removing USPS as the middleman, Amazon would have complete financial and operational control. Amazon refuted the report . Our take: For years, the e-commerce and cloud giant invested billions of dollars to build a vast logistics network that is now delivering more packages in the U.S. than UPS and FedEx . It still uses the USPS for delivery of small, low-weight packages, especially those from third-party Amazon sellers. USPS is also helpful for “last-mile delivery” in difficult-to-serve geographic areas. If the company were to eliminate the Postal Service as a middleman, it could further reduce its cost to serve, thereby improving margins. Possible IPO payday News: Anthropic, the AI startup behind the Claude chatbot, is reportedly in talks to launch one of the biggest IPOs ever in early 2026, according to the Financial Times. Anthropic responded that it had no immediate plans for an IPO and instead is “keeping our options open,” Anthropic chief communications officer Sasha de Marigny said at an Axios event in New York City on Thursday. Our take: An Anthropic public offering could be a massive payday for Amazon, which has invested about $8 billion in Anthropic. As part of that investment, Anthropic partnered with AWS as its primary cloud provider and training partner to run its massive AI training and inference workloads. An Anthropic IPO would elevate the AI startup and thereby enhance AWS’s dominance as the best-in-class cloud provider. Ultra-fast grocery delivery News: Amazon said it is testing an ultra-fast delivery service for fresh groceries, everyday essentials, and popular items, available in as little as 30 minutes, starting in Seattle and Philadelphia. Amazon Prime members get discounted delivery fees starting at $3.99 per order, compared with $13.99 for non-Prime customers. Club take: Amazon has continued to expand into online grocery and essentials, as customers increasingly opt to shop for daily essentials with the online retailer. While the retail business comes with thin margins, Amazon continues to operate it with an eye on reducing its cost to serve, which should help improve margins over time. Amazon is already second in line as the top U.S. retailer, right behind Walmart in terms of U.S. online grocery sales. As it continues to make headway in the industry, Amazon should be able to capitalize on this significant growth opportunity, especially as it harnesses its advanced AI capabilities for optimal inventory placement and demand forecasting. (Jim Cramer’s Charitable Trust is long AMZN, NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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