Amazon is investing heavily in data centers for AI technology, crucial for future profitability
From Nasdaq: 2025-07-01 09:57:00
This podcast covers the data center spending boom, Hims & Hers’ split with Novo Nordisk, overrated and underrated business stories, Disney’s box office woes, and two stocks to watch: Uber and Otis Worldwide. Progyny CEO Peter Anevski discusses the company’s growth path with analysts Tim Beyers and Holly Anderson. Want to invest $1,000? The Motley Fool analysts reveal the 10 best stocks to buy now, excluding Amazon. Stock Advisor’s total average return is 1,069%, outperforming the S&P 500. Amazon is making massive investments in data centers for AI technology with Project Rainier, aiming to revolutionize AI training and inference. Anthropic’s LLM Cloud will benefit from the enhanced computing power of Amazon’s data centers. This investment in AI technology is crucial for Amazon Web Services, the company’s primary source of operating profit. Amazon is expected to make most of its operating profit from Amazon Web Services in the next 5-10 years. In 2024, AWS accounted for around 58% of Amazon’s total operating profit, down from 67% in 2023. Despite big investments, AWS remains a key driver for the company’s profitability.
A New York Times story highlights Amazon’s largest data center, tailored for AI. Indiana granted Amazon a 550-year sales tax break for Data Center equipment, sparking controversy. The surge in AI spending has attracted REIT investors, with Digital Realty trading at an earnings multiple of 150 times due to its role in AI development.
While Digital Realty’s valuation seems high, considering depreciation expenses and nonrecurring costs, its funds from operations (FFO) put its earnings multiple at around 25. The REIT market for data centers may be frothy due to excessive spending from various players, including REITs, hyperscalers, and private equity firms.
Hims & Hers, an online healthcare company, faced a more than 30% drop in stock value after Novo Nordisk accused them of illegally selling knock off versions of Wegovy. This development comes amidst broader concerns over the legality and ethics of pharmaceutical sales online. Hims and Hers CEO Andrew Dudum responds to Novo Nordisk’s pressure to steer patients to Wegovy regardless of clinical standards, leading to a breakup shortly after their partnership was announced. The partnership gave Hims access to a leading GLP-1 drug, enhancing credibility but raising questions about compounded drugs not FDA approved.
Investors question Hims & Hers’ growth strategy as the company focuses on compounded drugs and questionable marketing tactics. With a goal to become a Netflix or Spotify for direct-to-consumer healthcare, the company must navigate reputational risks and potential growth limitations from FDA approval and global expansion challenges.
Comparing a company to the next big thing like Netflix or Spotify can be risky, as seen with Nikola being dubbed the next Tesla. Investors should approach such claims with caution, as few companies actually live up to the hype. Hims & Hers faces similar challenges as it aims to redefine healthcare through personalized treatments and AI-driven platforms.
Overrated stories of the year include DOGE’s failed savings projections under the Department of Government Efficiency and Tesla’s Robotaxi project, both falling short of expectations. Hims & Hers must navigate reputational risks and growth challenges as it aims to become a leading direct-to-consumer healthcare provider. It’s more about making sure we have the right partnerships in place to reach as many covered lives as possible. Currently, we are addressing about 6.4% of the 105 million covered lives that could benefit from Progyny’s fertility benefits. We need to invest in expanding our partnerships and reach to scale that number significantly. It’s a scale story that requires strategic investment in partnerships and outreach. Progyny emphasizes the importance of fertility benefits for employees, especially millennials, who are the largest portion of the US workforce. The average age of women seeking fertility treatments is 36. Companies prioritize this benefit to attract talent, and Progyny is expanding partnerships to offer comprehensive solutions to address the growing need for fertility services.
Progyny’s unique smart cycle approach to fertility benefits has led to successful partnerships, like the recent agreement with Cigna. By leveraging partnerships, Progyny enhances its financial strength and expands its market reach. The company focuses on different ways to grow and provide comprehensive solutions within the healthcare ecosystem.
Motley Fool employees have praised Progyny’s benefits, which often go unnoticed until someone asks about them. The company promotes education and quick enrollment to support employees using Progyny. The passion and support from Motley Fool contribute to the success stories of employees who have had babies with the help of Progyny.
Progyny’s unit economics play a crucial role in the company’s growth and financial sustainability. The declining national fertility rate since 2000 highlights the increasing demand for fertility services. Progyny aims to enhance client services over time, leading to higher cash flow margins and long-term success in the fertility benefits sector. In the US, more babies are being born to women over 30 than under for the first time, with a decline in overall births but growth in the 35 and over population. Fertility treatment demand is driven by the average age of women needing help at 36, with 99% client retention rate and expanding product offerings like egg freezing and surrogacy.
Disney’s Pixar film “Luca” underperformed at the box office, showing audiences prefer established IPs over original movies. Despite recent stumbles, Disney’s diversified portfolio can absorb failures like “Luca” as long as hits like “Inside Out 2” continue. The success of upcoming films like “Fantastic Four” will be crucial for Disney’s future in the MCU.
In a challenging movie market, getting audiences into theaters is tough despite making great films. Competition for attention is high, making it harder to draw viewers. Original movies can still succeed, but getting people to theaters is more difficult than in the past due to changing entertainment options.
Looking ahead, upcoming movies like “Mission Impossible: Final Reckoning” and “Spinal Tap II: The End Continues” are anticipated hits. “Superman” next month is seen as pivotal for reviving the DC Universe film franchise. The industry relies on big-name franchises and established IPs to draw audiences in a competitive market. Next month, a new Superman comic book will be released, exciting fans and investors like Ricky Mulvey. Jason Moser is optimistic about Uber’s partnership with Waymo for Robotaxis in Atlanta, highlighting the company’s growth and potential in the autonomous driving space. Matt Argersinger recommends Otis Worldwide, praising its market share and stable revenue from maintenance services. Despite fluctuating markets, the team at The Motley Fool remains engaged and enthusiastic about investment opportunities. 1. The stock market surged today with the S&P 500 reaching a record high of 4,200 points. This increase was fueled by strong earnings reports from tech companies like Apple and Amazon, driving investor confidence.
2. The CDC announced that fully vaccinated individuals can safely resume most activities without wearing masks or social distancing. This decision comes as more than 117 million Americans have received their COVID-19 vaccine.
3. The United Nations reported that global carbon dioxide emissions are set to reach record levels in 2023, despite efforts to reduce greenhouse gas emissions. This alarming trend highlights the urgent need for countries to take more aggressive action to combat climate change.
Read more at Nasdaq: Amazon Wants More Power | Nasdaq