Amazon's Cloud Business Ignites Asymmetrical Growth

Alex Sirois is buying Amazon (NASDAQ:AMZN) despite its down year-to-date, citing the company's cleanest risk-reward asymmetry in his portfolio. AMZN's stock price has increased only 6.56% this year, but the business underneath it just reported the fastest AWS growth in 18 quarters.

The setup is simple: Amazon is spending like a company that sees demand it cannot fill, and the market is pricing it like one whose free cash flow has turned negative. However, Sirois believes that only one of these statements will matter in ten years.

AWS revenue was $42.23 billion in Q2, up 37% year over year, with an annualized run rate of $169 billion and a backlog of $496 billion. AWS operating margin is 39.4%, indicating that growth is not being bought with giveaways.