Amazon is pursuing ‘too many ideas’ and needs to focus on best opportunities, analyst says in letter to Jassy
In its quest to upend everything from health care and grocery stores to internet satellites, Amazon has become too unfocused and is missing out on opportunities in its core businesses, according to Bernstein analysts, who on Wednesday published what they called an “open letter” to CEO Andy Jassy and the board.
Amazon remains dominant in e-commerce and cloud computing with Amazon Web Services. In some other areas, however, the company has spent heavily without seeing the results, the analysts said.
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“We fully support Amazon’s efforts to uncover and capture the next AWS-sized opportunity,” wrote Bernstein’s Mark Shmulik, who has an outperform rating on the stock. “But what we’ve seen recently is a company simply pursuing too many ideas, with weaker ideas taking away the oxygen, capital, and most importantly focus from the truly disruptive initiatives that ‘only Amazon can do.'”
Amazon’s stock performance compared with its “closest mega-cap peers” — Apple, Microsoft and Google — has also left investors wanting, Shmulik said. Amazon shares are up 50% year to date, but they’ve underperformed top peers by about 52% over a five-year period, he said.
The stock was down 3.6% to $122.12 as of early afternoon New York time.
Shmulik urged Amazon to get back to its “Day One” mentality, referring to a phrase championed by Amazon founder and Executive Chairman Jeff Bezos, who was succeeded by Jassy in July 2021. Bezos famously said a Day One mentality would help Amazon stave off its demise, and described it as continuing to innovate rapidly like a startup, no matter how large the company becomes.
“Day 2 is stasis,” Bezos said in a 2017 shareholder letter. “Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
Amazon should “divest, seek outside funding, or trim spend” in health care and its nascent low Earth orbit satellite venture, called Project Kuiper, Shmulik wrote. He pointed to Amazon’s multiyear effort to break into health care, before abandoning efforts like its Care telehealth service, Halo health and fitness band, and a joint health-care venture called Haven.
Kuiper “appears even more extreme as an investment area,” according to Shmulik, with Amazon committing $10 billion to build out the initiative. Google’s lack of success with its Project Loon, Fiber and Fi efforts signals “capital intensive low-margin utilities aren’t worth the effort regardless of how ‘cool’ the technology may be,” he wrote.
Amazon should even take a page out of Alphabet’s book and strip out Kuiper, health care and possibly Alexa into “other bets,” Shmulik said. Doing so, he says, would show a “far healthier and more profitable core business” and wouldn’t detract from the company’s effort to “build the next AWS.”
Shmulik is also skeptical of Amazon’s ongoing efforts to expand in international markets like Brazil, Singapore and India, where competition remains stiff. He calls it a case of throwing “good money after bad,” despite the strategic value that those markets may hold.
When it comes to Whole Foods, Fresh supermarkets and Go cashierless convenience stories, Amazon needs to “make a call on physical grocery,” Shmulik wrote. Amazon bought Whole Foods for $13.7 billion in 2017, and has continued to build out its grocery offerings on its website, while launching other experimental shops. Recently, the company paused further expansion of its Fresh and Go stores as Jassy looks to cut costs.
Instead of continuing to “tinker with” its Fresh and Go stores, Shmulik said Amazon should “purchase a proven concept such as potential divested KR/ACI stores,” referring to the stores Kroger and Albertsons’ are selling off as part of their planned merger.
Amazon should focus on its core strengths and keep pushing into other areas where it’s gained traction, Shmulik said, encouraging a continued build-out of its advertising and media arms, as well as its Buy With Prime service, which allows websites off of Amazon to take advantage of its Prime delivery benefits.
The current scattershot approach is confusing to shareholders and needs to be cleared up to stem continued underperformance, Shmulik added, calling out uncertainty around where Amazon falls in the artificial intelligence race.
“We get investor questions today asking ‘is AWS in last place in AI?’, ‘is retail actually a profitable business?’, and even ‘do we want Andy on the earnings call?'” Shmulik wrote. “It points to one underlying issue: Amazon doesn’t own its own narrative.”
Amazon didn’t immediately respond to a request for comment.
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Peter Thiel, co-founder of PayPal, Palantir Technologies, and Founders Fund, holds hundred dollar bills as he speaks during the Bitcoin 2022 Conference at Miami Beach Convention Center on April 7, 2022 in Miami, Florida.
Marco Bello | Getty Images
The Peter Thiel-backed cryptocurrency exchange Bullish filed for an IPO on Friday, the latest digital asset firm to head for the public market.
The company, led by CEO Tom Farley, a veteran of the finance industry and former president of the New York Stock Exchange, said it plans to trade on the NYSE under the ticker symbol “BLSH.”
A spinout of Block.one, Bullish started with an initial investment from backers including Thiel’s Founders Fund and Thiel Capital, along with Nomura, Mike Novogratz and others. Bullish acquired crypto news site CoinDesk in 2023.
“In the first quarter of 2025, Bullish exchange executed over $2.5 billion in average daily volume, ranking in the top five exchanges by spot volume for Bitcoin and Ether,” the company said on its website. The prospectus listed top competitors as Binance, Coinbase and Kraken.
The IPO filing says that as of March 31, the total trading volume since launch has exceeded $1.25 trillion.
The filing is another significant step for the cryptocurrency industry, which has fought for years to convince institutions to embrace digital assets as legitimate investments.
It’s already been a big year on the market for crypto offerings, highlighted by stablecoin issuer Circle, which has jumped more than sevenfold since its IPO in June. Etoro, an online trading platform that includes services for crypto investors, debuted in May.
Novogratz‘s crypto firm Galaxy Digital started trading on the Nasdaq in May, moving its listing from the Toronto Stock Exchange. And in June, Gemini, the cryptocurrency exchange and custodian founded by Cameron and Tyler Winklevoss, confidentially filed for an IPO in the U.S.
Meanwhile, investors continue to flock to bitcoin. The digital currency is trading at over $117,000, up from about $94,000 at the start of the year.
President Donald Trump, on Friday, signed the GENIUS Act into law — a set of regulations that establish some initial consumer protections around stablecoins, which are tied to assets like the U.S. dollar with the intent of reducing price volatility associated with many cryptocurrencies.
In its filing with the SEC, Bullish says its mission is partly to “drive the adoption of stablecoins, digital assets, and blockchain technology.”
Crypto industry players, including Thiel, Elon Musk, and President Trump’s AI and Crypto czar David Sacks spent heavily to re-elect Trump and have pushed for legislation that legitimizes digital assets and exchanges.
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Microsoft Chairman and Chief Executive Officer Satya Nadella (L) returns to the stage after a pre-recorded interview during the Microsoft Build conference opening keynote in Seattle, Washington on May 19, 2025.
Jason Redmond | AFP | Getty Images
Microsoft on Friday revised its practices to ensure that engineers in China no longer provide technical support to U.S. defense clients using the company’s cloud services.
The company implemented the changes in an effort to reduce national security and cybersecurity risks stemming from its cloud work with a major customer. The announcement came days after ProPublica published an extensive report describing the Defense Department’s dependence on Microsoft software engineers in China.
“In response to concerns raised earlier this week about US-supervised foreign engineers, Microsoft has made changes to our support for US Government customers to assure that no China-based engineering teams are providing technical assistance for DoD Government cloud and related services,” Frank Shaw, the Microsoft’s chief communications officer, wrote in a Friday X post.
The change impacts the work of Microsoft’s Azure cloud services division, which analysts estimate now generates more than 25% of the company’s revenue. That makes Azure bigger than Google Cloud but smaller than Amazon Web Services. Microsoft receives “substantial revenue from government contracts,” according to its most recent quarterly earnings statement, and more than half of the company’s $70 billion in first-quarter revenue came from customers based in the U.S.
In 2019, Microsoft won a $10 billion cloud-related defense contract, but the Pentagon wound up canceling it in 2021 after a legal battle. In 2022, the department gave cloud contracts worth up to $9 billion in total to Amazon, Google, Oracle and Microsoft.
ProPublica reported that the work of Microsoft’s Chinese Azure engineers is overseen by “digital escorts” in the U.S., who typically have less technical prowess than the employees they manage overseas. The report detailed how the “digital escort” arrangement might leave the U.S. vulnerable to a cyberattack from China.
“This is obviously unacceptable, especially in today’s digital threat environment,” Defense Secretary Pete Hegseth said in a video posted to X on Friday. He described the architecture as “a legacy system created over a decade ago, during the Obama administration.” The Defense Department will review its systems in search for similar activity, Hegseth said.
Microsoft originally told ProPublica that its employees and contractors were adhering to U.S. government rules.
“We remain committed to providing the most secure services possible to the US government, including working with our national security partners to evaluate and adjust our security protocols as needed,” Shaw wrote.
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